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Carnegie Endowment for International Peace 

DIVISION OF ECONOMICS AND HISTORY 
JOHN BATES CLARK, DIRECTOR 



PRELIMINARY ECONOMIC STUDIES OF THE WAlR 



EDITED BY 

DAVID KINLEY 

Professor of Political Economy, University of Illinois 
Member of Committee of Research of the Endowment 

No. 19 



PRICES AND PRICE CONTROL IN GREAT 

BRITAIN AND THE UNITED STATES 

DURING THE WORLD WAR 



SIMON LITMAN 

Professor of Economics, University of Illinois 



NEW YORK 

OXFORD UNIVERSITY PRESS 

AMERICAN BRANCH: 35 WEST 32nd STREET 

LONDON, TORONTO, MELBOURNE AND BOMBAY 

1920 






mo. 



nograjBjj 






\^P 



COPYRIGHT 1920 

BY THE 

CARNEGIE ENDOWMENT FOR 

INTERNATIONAL PEACE 

WASHINGTON, D. C. 



'^TiBttbatA&Tn 



THE R'JMFORD PRESS 
CONCORD 



PRICES AND PRICE CONTROL IN GREAT 

BRITAIN AND THE UNITED STATES 

DURING THE WORLD WAR 



PRELIMINARY ECONOMIC STUDIES OF THE WAR 

EDITED BY DAVID KINLEY 

Professor of Political Economy, University of Illinois 
Member of Committee of Research of the Endowment 

1 Early Economic Effects of the War upon Canada. By Adam Shortt, formerly Commis- 

sioner of the Canadian Civil Service, now Cliairman, Board of Historical Publications, 
Canada. 

2 Early Effects of the European War upon the Finance, Commerce and Industry of 

Chile. By L. S. Rowe, Professor of Political Science, University of Pennsylvania. 

3 War Administration of the Railways in the United States and Great Britain. By 

Frank H. Dixon, Professor of Economics, Dartmouth College, and Julius H. Parmelee, 
Statistician, Bureau of Railway Economics. 

4 Economic Effects of the War upon Women and Children in Great Britain. By Irene 

Osgood Andrews, Assistant Secretary of the American Association for Labor Legislation. 

5. Direct Costs of the Present War. By Ernest L. Bogart, Professor of Economics, Univer- 

sity of Illinois. 

6. Effects of the War upon Insurance with Specla.l Reference to the Substitution 

OF Insurance for Pensions. By WiUiam F. Gephart, Professor of Economics, Wash- 
ington University, 'St. Louis. 

7. The Fin.\ncial History of Great Britain, 1914-1918. By Frank L. McVey, President, 

University of Kentucky. 

8. British War Administration. By John A. Fairlie, Professor of Political Science, Univer- 

sity of Illinois. 

9. Influence of the Great War upon Shipping. By J. Russell Smith, Professor of Industry, 

University of Pennsylvania. 

10. War Thrift. By Thomas Nixon Carver, Professor of Political Economy, Harvard Univer- 

sity. 

11. Effects of the Great War upon Agriculture in the United States and Great Britain. 

By Benjamin H. Hibbard, Professor of Agricultural Economics, University of Wisconsin. 

12. Disabled Soldiers and Sailors — Pensions and Training. By Edward T. Devine, Pro- 

fessor of Social Economy, Columbia University. 

13. Government Control of the Liquor Business in Great Britain and the United States. 

By Thomas Nixon Carver, Professor of Political Economy, Harvard University. 

14. British Labor Conditions and Legislation during the War. By Matthew B. Hammond, 

Professor of Economics, Ohio State University. 

15. Effects of the War upon Money, Credit and Banking in France and the United 

States. By B. M. Anderson, Jr., Ph.D. 

16. Negro Migration during the War. By Emmett J. Scott, Secretary-Treasurer, Howard 

University, Washington, D. C. 

17. Early Effects of the War upon the Finance, Commerce and Industry of Peru. By 

L. S. Rowe, Professor of Political Science, University of Pennsylvania. 

*i8. Government War Control of Industry and Trade, with Special Reference to Great 
Brit.\in and the United States. By Charles Whiting Baker, New York City. 

19. Prices and Price Control in Gre.\t Britain and the United States during the 
World War. By Simon Litman, Professor of Economics, University of Illinois. 

*20. The Relation of the Economic and Social Conditions in Southeastern Europe and in 
Alsace-Lorraine to Conditions of Peace. Two volumes. By Stephen Pierce Dug- 
gan, Professor of Education, College of the City of New York. 

*2i. The Germans in South America: A Contribution to the Economic History of the War. 
By C. H. Haring, Professor of History, Yale University. 

*22. Effects of the War on Pauperism, Crime and Programs of Social Welfare. By Edith 
Abbott, Lecturer in Sociology, University of Chicago. 

*23. Monetary Conditions in War Times in India, Mexico and the Philippines. By E. W. 
Kemmerer, Professor of Economics and Finance, Princeton University. 

24. Direct and Indirect Costs of the Great World War. By Ernest L. Bogart, Professor 
of Economics, University of Illinois. (Revised edition of Study No. 5.) 

*25. Government War Contracts. By John F. Crowell, Consulting Economist, New York City. 

*26. Cooperative Movement in Russia. By E. M. Kayden. 

THE CARNEGIE ENDOWMENT FOR INTERNATIONAL PEACE 

2 JACKSON PLACE, WASHINGTON, D. C. 
* These numbers have not yet been published. 



EDITOR'S PREFACE 

Professor Litman's study of prices is a welcome addition 
to the literature of the subject. The general trend of its con- 
clusions, however, will not surprise a student of economic 
history. The charges of profiteering and manipulation which 
have been so rife in the past three years are paralleled in the 
experience of the world in every great war. Efforts to control 
these movements by law show in general a similar history and 
similar results on all occasions. Here and there, under such 
circumstances, a government is able to catch and punish a 
profiteer. But legal action on the whole has had little effect 
at any time in preventing or removing the evil practices that 
have called forth so much popular denunciation. 

Still more true is it that the legal activity of governments, 
on the whole, has had little influence in fixing prices or in 
keeping them stable. Most of the evidence to this effect, 
when carefully studied, shows that the results have been ob- 
tained in occasional cases and have had little permanent 
effect. The truth is that the lines of economic activity for 
the accomplishment of even one purpose are so numerous 
that the severing of one usually serves to render the others 
more open. Most of the good effect which the agitation, 
legislation and legal prosecutions of the past three years have 
had in this field has been a result of psychological rather 
than of legal influences. The great bulk of business and 
popular opinion in the United States has been in favor of 
the proposition that individuals should not be permitted to 
make undue profit at the expense of the people in a crisis. 
The good results of the agitation can be attributed, therefore, 
to the general high standard of business integrity rather than 
to fear of legal prosecution. This may be fairly said, making 
allowance for all exceptions in the way of successful prose- 
cution by the officers of the government. It was a realiza- 
tion beforehand of the practical impossibility of controlling 



vi editor's preface 

the situation by law which evidently led the Food Adminis- 
tration to rely largely on appeals to the good sense and patri- 
otism of the people in its attempt to keep the prices of food 
stable. To have fixed prices for the multitude of articles 
consumed as food under the multifarious and daily changing 
economic conditions would have been futile and foolish. On 
the whole, the policy of our government was sound in laying 
down prices for certain great staples and relying on the judg- 
ment of the people, based on information furnished freely by 
the government from day to day, to see to it that they were 
not exploited. 

It is too much to hope that another generation will take 
to heart the lessons taught by the experiences recorded in 
this and other volumes of this series or works dealing with 
similar subjects. Each generation, like each individual, 
must learn in large measure from its own experience. Never- 
theless, history shows that there are always some leading 
minds who are able to exert an influence in a new crisis in the 
direction of sanity and safety by their studies of similar expe- 
riences in the past. To that extent, at any rate, we may hope 
that the influence of these studies will be helpful. 

David Kinley, 

Editor. 
Urbana, Illinois, 
July i6, 1920. 



FOREWORD 

The part of the work deahng with price control In the 
United Kingdom was finished in July, 1918; that which con- 
siders prices and price regulation in the United States was 
begun in November, 1918, and concluded in June, 1919. 
Detailed discussions of such items as causes of the rise in 
prices, profiteering, industrial unrest, which are included in 
the treatment of price control in Great Britain, are omitted 
from the part considering price fixing in the United States; 
this was done chiefly because such an inquiry, although it 
would have presented some additional illustrative material, 
would have involved too much repetition and lengthened 
considerably the study, without aiding either in the statement 
of the problems or in their elucidation. On the other hand, 
the consideration of the control of articles directly used for 
war purposes, such as iron and steel, copper, hides and leather, 
etc., which is omitted from the part dealing with Great 
Britain, is included in the investigation of price fixing in the 
United States. 

The author wishes to express his deep appreciation to Pro- 
fessor David Kinley for notes and other material which the 
latter gave him when he found that lack of time would make 
it impossible for him to do his share of what was originally 
intended to be a joint undertaking. 

Simon Litman. 



CONTENTS 

Part I — Great Britain 

CHAPTER PAGE 

I Price Control in the Past 5 

II Movement of Prices since Outbreak of War ... 12 

III Causes of the Rise in Prices 36 

IV Profiteering 64 

V The Condition of Workmen 78 

VI Rise in Prices and Industrial Unrest 92 

VII Governmental Control and Price Fixing — Food 104 

VIII Governmental Control and Price Fixing — Coal 142 

IX Home Production of Food and Minimum Prices 151 

X Criticism of Price Fixing 160 

Appendix to Part I 169 

Part II — The United States 

I Movement of Prices during the War 181 

II Wages and Cost of Living 194 

III Legislation Authorizing Price Fixing and Price 

Fixing Agencies 203 

IV Wheat, Flour and Bread 219 

V Sugar 237 

VI Meat and Dairy Products 249 

VII Fuel 262 

VIII Iron and Steel 278 

IX Nonferrous Metals : 290 

X Fibers and Textiles 298 

XI Miscellaneous Products 304 

XII Conclusions 318 

Appendix to Part II 321 

Index 327 



PART I 
GREAT BRITAIN 



INTRODUCTION 

The various orders issued by the Army Council, the Min- 
istry of Munitions, the Admiralty and other bodies, to whom 
authority was given under the Defense of Realm Act to fix 
prices, are not included in this study. A great many of these 
orders were requisitionary in nature, and although their indirect 
effect upon prices for the civilian population may have been 
important, the consideration of these orders, with their mi- 
nute provisions, had to be omitted from a preliminary study 
of price control, the more so as the restrictive regulations of 
this character have been particularly pronounced during the 
past few months and seem to grow with each succeeding day. 
It is futile to try to keep up at present with the measures 
passed by the Army Council within whose jurisdiction are the 
woolen, linen, flax, jute, hides, leather and hay supplies, with 
the orders of the Ministry of Munitions, which has control 
over iron, steel, aluminum, copper, etc., and with the various 
other enactments, which fixed maximum prices on matches, 
on timber, on sulphuric acid, on oils and fats, and on many 
other commodities. 

The investigation has been chiefly confined to those things 
which most vitally affect the final consumer and which have 
provoked the greatest amount of dissatisfaction and of 
discussion. 



CHAPTER I 
Price Control in the Past 

Agitation against speculation and the middleman Is not 
new; neither Is the attempt to prevent the first and to control 
the latter by means of legislative enactments. As far back 
as 301 A.D. Diocletian undertook to fix the price of certain 
commodities, but his attempt proved a failure.^ 

In the thirteenth century public authorities In England "felt 
themselves bound to regulate every sort of economic transaction 
in which individual self-interest seemed to lead to Injustice. "^ 
Forestalling, engrossing and regrating, practices roughly 
corresponding to the more modern speculation and to the 
"evil practices" of the present day middlemen, were punish- 
able by law. By the command of the king, no forestaller was 
"suffered to dwell in any town"; such a man was branded as 
"an oppressor of the poor, the public enemy of the whole 
community and country."^ Trade regulations were guided 
by the general principle that a just and reasonable price only 
should be paid, and only such articles be sold as were of good 
quality and of correct measure. Not only the state, but also 
guilds and municipalities acted as price fixers in the Middle 
Ages. Most enactments were promulgated at that time for 
the purpose of preventing some particular form of fraud in 
some particular commodity. But there were a number of 
measures passed more general in character. Economic con- 
ditions in the Middle Ages were such that individuals If 
unrestrained by law could easily obtain a temporary monop- 
oly over any of the basic products. The supply of these 
was usually obtained by the consumers from comparatively 
few neighborhood communities. The establishment of a 

1 J. E. Davies: "Is Price Fixing Possible," The Independent, October 20, 1917, 

P- 134- 

2 W. J. Ashley: English Economic History, vol. i, pt. i, p. l8l. 
^ Ibid., p. 187. 



6 PRICES AND PRICE CONTROL DURING THE WAR 

"corner" in grain or in any other product was under such 
circumstances not a difficult matter. 

An attempt to control both the wholesale and the retail price 
of wine by fixing a maximum was made by the British Govern- 
ment in II 99. " The measure failed^ and in 1330, after a long 
period of ineffectiveness, a new law was passed, which re- 
quired the merchants to sell at a "reasonable" price, the 
latter to be based on import price plus expenses. This new 
measure of control proved as futile as the old one, and in a 
few years, because of changed conditions of production and 
trade, the price of wine went up far beyond what it had been, 
as well as beyond the government expectations. 

A result similar to this followed the many efforts to regulate 
the prices of wheat and bread. In this instance the govern- 
ment endeavored to fix not a maximum price but a sliding 
scale. The first attempt was made as early as 1202. The 
most important ordinance on the matter was 51 Henry III. 
This ordinance fixed changing weights for the farthing loaf 
to correspond to six penny variations In the price of the quar- 
ter of wheat from twelve pence to twelve shillings. The law 
was enforced locally on sundry occasions, but fell gradually 
into disuse. 

Of particular Interest is the more recent experience with 
maximum prices which France underwent at the close of the 
eighteenth century. The first law establishing a maximum 
was passed on May 3, 1793. It was one of the extraordinary 
measures adopted by the Committee of Public Safety, along 
with a progressive tax on the rich and forced loans. ^ Spurious 
decrees of the National Assembly, ordering the people not to 
pay more than one sou for a pound of bread, were circulated 
as early as March and April, 1790.^ The May law was 
passed in order to curb speculation and profiteering, as well as 
to assure comfort to the poor.* The committee promulgated 
It under the pressure of public opinion. The necessity for 

1 Ashley: op. cit., p. 191. 

2 I. R. M. Macdonald: A History of France, vol. iii, p. 31. 
' Kropotkin: The Great French Revolution, p. 207. 

* Morris: The French Revolution, p. 100. 



GREAT BRITAIN 7 

passing such a law of maximum had been hinted at by Saint 
Just In the latter part of 1792.1 

As a result of overissue of paper money and the blockade, 
an Intolerable economic situation gripped the country and led 
to widespread dissatisfaction; many petitions had been pre- 
sented to the government, requesting It to take some definite 
action In order to stop the rapid rise In prices. 2- 

The decree of May, 1793, applied to grain and flour, and It 
provided that in each department the price should be the 
average of local market prices which prevailed from January 
to May. It was made a penal offense for the farmers to dis- 
tinguish between payments In asslgnats and In coin. Thanks 
to an abundant harvest, the proletariat of the cities was In a 
measure supplied with bread, but the difficulties grew from 
day to day; farmers were Inclined to keep their grain away 
from the markets, and In several departments the enforcement 
of the law was abandoned by the close of August, 1798, It 
being generally recognized that this first experiment with the 
maximum was a failure.^ Popular uprisings were taking 
place In different parts of France. In Saint Etienne-en- 
Forez the people killed one of the monopolists and appointed 
a new municipality, which was compelled to lower the price 
of bread; but thereupon the middle classes armed themselves 
and arrested many of the rebels.^ The Paris Commune, 
having obtained large grants from the convention for the 
purchase of flour, succeeded In keeping the price of bread to 
three halfpence a pound. The Commune was paying to the 
holders of wheat high prices at the expense of the state. To 
obtain bread at the low price, people were compelled to stand 
In long line for hours, often through the night, at the baker's 
door.^ 

When It came to the reconsideration of the May measure, 

1 Cambridge Modern History, vol. 8. The French Revolution. 

2 Dr. Robinet: Dictionnaire Historique et Biographique de la Revolution et de 
V Empire (1789-18 15), pp. 543-546- 

^ Bourne: "Maximum Prices in France," American Historical Review, October, 
1917, p. no. 
^ Kropotkin: op. cit., p. 208. 
^ Ibid., p. 372. 



8 PRICES AND PRICE CONTROL DURING THE WAR 

the Girondins declared themselves as opposed to any price 
fixing scheme, but their opposition was swept aside by the 
Montagne, who considered that the salvation lay not in the 
retraction of the measure but in its expansion, so that it should 
include all primary necessities. The extremists (Varlet, 
Jacques Rout) were agitating for the communalization and 
nationalization of all commerce, and for the organization of an 
exchange of all goods at cost price. ^ On September ii, 1793, 
a plan was adopted of fixing a uniform price for commodities 
for the whole country, making allowances for the cost of 
transportation. This plan was soon abandoned and the law 
of September 29 promulgated, decreeing that prices should 
be local prices of 1790, plus one-third. This system also 
proved unworkable, and on November i the convention 
decided that prices should be based upon those of 1790 at 
the place of production. To these prices were to be added 
one-third, plus a rate per league for carriage and five per cent 
for the wholesaler and ten per cent for the retailer. ^ Public 
authorities had a right to compel farmers to bring grain to the 
market, where it could be bought at the maximum price. A 
study of the situation shows that by means of such com- 
mandeering or requisitioning, French cities were kept pro- 
visioned with grain during the last half of 1793 and the larger 
part of 1794. It is obvious that such a system of force could 
be successful for but a short period. Commandeering of 
supplies was not conducive to keeping farmers at work, 
neither was the provision of the law setting definite margins 
to distributors conducive to their staying in business. The 
merchants had no interest in buying at the maximum in one 
place and transporting commodities to another when they 
were obliged to sell at the same price. Thus the accusation 
brought against farmers that their greed defeated the law 
was not wholly justified. Many of them after they brought 
their grain to market were not able to find any one willing to 
buy it. In criticizing the law of the maximum, it is well, 

^ Kropotkin: op. cit., p. 373. 

2 Bourne: op. cit., p. 112. See also Bourne: "Food Control and Price Fixing in 
Revolutionary France," Journal of Political Economy, February and March, 1919.. 



GREAT BRITAIN 9 

however, to remember that at the time of its promulgation 
the economic condition of France was most wretched. Those 
of the historians who like Levasseur or Taine see in maximum 
measures nothing but illustrations of violence and adminis- 
trative incapacity overlook the enormous difficulties under 
which the government of France had been laboring. France 
was blockaded, attacked by the armies of combined Europe, 
torn by internal dissentions. France was in a condition 
where one department distrusted another in the matter of 
food and where the flood of paper money was preventing a 
proper exchange of commodities. Although proven unten- 
able for any length of time, the maximum seems to have at 
least partially succeeded in alleviating the misery of the urban 
proletariat. It is true that food was scarce and of poor 
quality and that many unfortunate farmers and dealers who 
refused to put their goods on sale at legal prices were dragged 
by sans cullotes before the Revolutionary Tribunal^ and put 
to death, but it is difficult to say how many of them would 
have met a similar fate without the law and how far the in- 
furiated mobs would have gone in their work of vengeance 
and destruction if no maximum was on the statute books. 

The temper of the Paris Commune may be realized if one 
reflects on the fact that when in September, 1793, the price 
fixing law was being discussed in the convention, the munici- 
pal council of Paris voted to proceed to the convention in a 
body and demand the creation of a "revolutionary army, 
which should march whenever necessary to thwart the ma- 
noeuvres of egoists and forestallers and bring them to justice — 
to force avarice and cupidity to disgorge the riches of the 
earth."2 

One of the results of the maximum was the growth of con- 
traband trade, which reached enormous proportions. Butter, 
eggs and meat, particularly, were peddled in small quantities 
by resellers, and it was practically impossible to control the 
prices charged by such persons, who "made their way into 

1 Shailer Mathews: The French Revolution, p. 247. 

2 Bourne: "Maximum Prices in France," American Historical Review, October, 
1917, p. 113. 



10 PRICES AND PRICE CONTROL DURING THE WAR 

alleys, to the doors of apartments and to the service entrances 
of the rlch."i The growth of the contraband trade was one 
of the contributing causes which made the law unpopular. 
With the defeat of the extremists in the convention the 
measure was doomed. It was repealed in December, 1794. 

On the American continent efforts to control prices can be 
traced to colonial days. Weeden in his Economic and Social 
History of New England relates of the price of beaver, esti- 
mated by the governor and council of New England at 6s. in 
fair exchange for English goods at thirty per cent profit, with 
the freight added. ^ This was in their opinion a normal value. 
The scarcity of corn, which sold at los. "the strike," led to 
the prohibition of the sale of this food to the Indians. Under 
the pressure of this prohibition, beaver advanced to los. and 
20s. per pound, the natives having refused to part with beaver 
unless they were given corn. The court was obliged to re- 
move the fixed rate, and the price which ruled was 20s. 

Another fruitless attempt at regulation referred to the 
price of labor. Carpenters, joiners, bricklayers, sawyers and 
thatchers were limited to 2s. per day. Any one who paid 
more or received more was to be fined los. Sawyers could 
take 4s. 6d. for one hundred feet of boards, at "six scoore to ye 
hundred," if the wood was felled and squared for them, with 
IS. extra if they felled and squared their own timber. Again, 
master carpenters, masons, bricklayers, were limited to i6d. 
per day, plus board, and the "second sort" to I2d. These 
regulations were enforced for about six months and then were 
repealed.^ To offset fixed wages, "the court in 1634 limited 
the rate of profit at 4a. in the shilling of cash cost in England 
on all importations of provisions, clothing, tools or commodi- 
ties, except cheese, wine, oil, vinegar and liquors, which were 
left free on account of the extra risk they occasioned."* In 
1635 the statutes limiting profits and fixing rates of wages 
were repealed. 

^ Bourne: op. cit., p. 112. 

* W. U. Weeden: Economic and Social History of New England, 1620-1789, 

p.97- 

3 Ibid., p. 99. 
'^ Ibid., p. 118. 



GREAT BRITAIN II 

In 1 711, when Walker's expedition against Canada took 
place, the people of Boston were requested to supply with 
provisions the British fleet which sailed into that harbor. 
The Assembly ordered that the prices of provisions and other 
necessaries of the service should stand fixed at the point 
where they stood before the approach of the fleet was known. 
"Sheriffs and constables, jointly with Queen's officers, were 
ordered to search all the town for provisions and liquors and, 
if the owners refused to part with them at the prescribed 
prices, to break open doors and seize them."i These measures 
though ordered by their own representatives caused a great 
deal of discontent among the colonists. They expected 
prices to rise with the repeal of the enactments, and the com- 
pulsion to sell goods at low fixed rates was very distasteful to 
them. 

The farmers, both in revolutionary France at the time of 
the maximum and in the United States during the recent 
war after the price of wheat was fixed, showed no haste to 
bring their produce to the market. 

iParkman: "A Half Century of Conflict," Boston Transcript, April 2, 1918, 
p. 12. 



CHAPTER II 

Movement of Prices since Outbreak of War 

Since the beginning of the war both the general level of 
wholesale and retail prices and the absolute prices of specific 
commodities, whether necessities or luxuries, have risen 
steadily and to great heights. 

Wholesale Prices 

The extent of the increase in the average wholesale prices 
may be ascertained from index numbers published regularly 
by the Statist, the London Economist, and the Board of Trade 
Labour Gazette. 

The average wholesale prices of commodities as gauged by 
the Statist's index number of the prices of forty-five articles 
were the same in 1914 as in 1913 or 1912. During these three 
years the index figure stood at 85, or 15 per cent below the 
Statist's standard period (1867-1877 = 100) and 10 per cent 
above the average of the last ten years, 1 904-1 91 5. While 
the total for 1914 does not show any enhancement in the 
general level of prices, considerable fluctuation took place 
during the year in the different groups of commodities which 
comprise this total. Taking articles of foods and materials 
separately, one finds that the index figure for food rose during 
the year from 'jy to 81, the largest increase, from 69 to 75, hav- 
ing taken place in the vegetable food, such as corn, etc. ; animal 
food increased in price much less than it did either in 1912 
or 1913, rising only one point, from 99 to 100, while the rise 
was 6 points in 1912 and 3 points in 191 3. Sugar, coffee and 
tea increased from 54 to 58 ; with this increase the index figure 
remained 5 points below that of 191 1 and 4 points below that 
of 19 12. There was a drop in the price of materials from 91 
to 88 ; minerals declined from in in i9i3to 99 in 1914; textiles, 
from 84 in 1913, to 81 in 1914 (the index figure for 191 1 and 
1912 was 73); sundry materials advanced 4 points in 1914, 
from 83 to 87, during the two previous years the figures being 



GREAT BRITAIN 1 3 

81 and 82, respectively. The fall in the price of materials 
was partially due to the fact that there was a decline in their 
price during the first six months; this decline offset the 
small advance in the latter part of the year. The index 
number for food was 74.8 in June, 1914, as compared with 
75.7 In December, I9i3,and 90.9 in December, 1914; the index 
number for materials was 85.7 In June, 1914, as compared 
with 89.8 In December, 1913, and 92.1 in December, 1914.^ 

The combined index number of all commodities for 1915 
was 27 per cent higher than for 1914 and 1913. It was 8 
per cent above the standard period 1 867-1 877 and 32 per 
cent above the average of the years 1906-1915. Food rose 
from 74.8 in June, 1914, to 90.9 in December of the same 
year and to 111.4 In December, 1915, a rise of 49.0 per cent 
in the 18 months of the war. Materials rose from 25.7 In 
June, 1914, to 92.1 in December, 1914, and 123.4 iri December, 
1 915, a rise of 44 per cent. The greatest Increase in 191 5 
was in textiles, which advanced 43.6 per cent. In comparison 
with the index number immediately prior to the war, there 
was an advance of 38.6 per cent in textiles at the end of 
December, 1915. 

The advance In minerals was 36.3 per cent In 1915, making 
a total advance since the beginning of the war of 40.6 per 
cent. The advance In vegetable food was 29.1 per cent, 
bringing the aggregate advance to 76.8 per cent since June, 
1914. The rise In animal food was less pronounced, amount- 
ing to 22.8 per cent during 1915 and to 31.4 per cent since the 
outbreak of the war. In the group of sugar, coffee and tea, 
the rise was almost entirely confined to sugar, which rose In 
1 91 5 about 30 per cent; the advance for the group was 10.8 
per cent for the year and 34.7 per cent since June, 1914. 
Sundry materials rose 26.8 per cent In 191 5 and 50.2 per cent 
since the war began. The rise was particularly great in tim- 
ber, linseed and Indigo. In the aggregate their advance was 
22.5 per cent for the year and since the war began 49 per cent.^ 

^ George Paish: "Prices of Commodities in 19 14," Journal of the Royal Statistical 
Society, March, 1915, pp. 281-283. 

2 Paish: "Prices of Commodities in 1915," Journal of the Royal Statistical 
Society, March, 1916, pp. 1 79-191. 



14 PRICES AND PRICE CONTROL DURING THE WAR 

In 1916 the combined Index number was 136, or 26 per cent 
higher than in 1915, and 60 per cent higher than in 1914, 
1 91 3 and 1 91 2. It was 36 per cent above the Statist's 
standard period 1 867-1 877 and 54 per cent above the aver- 
age of the years 1907-19 16. The greatest rise in average 
prices in 1916, as in 1915, was in textiles, which advanced 
during the year 39.4 per cent. This advance was chiefly due 
to the sharp rise in the price of cotton, particularly in the 
latter part of the year. Minerals rose during the same period 
26 per cent and sundry materials 25.4 per cent. The ad- 
vance in the average prices for the total group of materials in 
1916 was 29.3 per cent, as compared with 22.1 per cent for 
foodstuffs. There was relatively little difference between the 
increase in the price of vegetable food, animal food, and 
sugar, coffee and tea; they rose 22.8 per cent, 21.1 per cent 
and 22.7 per cent respectively. The rise in the average 
prices over 1913 was 69.3 for foodstuffs and 54.1 for materials.^ 

The greatest rise in average prices in 191 7 was again in 
textiles, which advanced 49 per cent; the advance, like the 
one of 39 per cent in the preceding year, was largely due to 
the continuance of the substantial rise in the price of cotton. 
Vegetable foods and sugar, coffee, and tea each showed a rise 
in price of 31 per cent during 191 7; sundries were 28 per cent 
and animal food was 26 per cent dearer. In minerals, because 
of greater governmental control than in other departments, the 
rise in prices for 191 7 over those for 191 6 was only 8 per cent. 

In comparing the average prices for 191 7 with those of the 
prewar year 191 3, one finds that vegetable foods have shown 
the most marked increase, one of 1 50 per cent, textiles, second in 
the list, having risen 130 per cent. Minerals increased in price 
less than any other group of commodities, the rise having 
been 55 per cent. This was due in part to a stricter system 
of control of minerals introduced by the government, in part 
to the fact that the price of mineral ini9i3 was high, because of 
a coal strike in the spring of that year. The price of animal 

' Editor of the Statist: "Wholesale Prices of Commodities in 1916," Journal 
of the Royal Statistical Society, March, 1917, pp. 289-294. 



GREAT BRITAIN 



15 



food rose between 1913 and 1917, 96 per cent; the price of 
sugar, coffee and tea, iii per cent, and that of sundry materi- 
als, 109 per cent. Since 1913 the percentage rise for all food- 
stuffs was 118, for all materials, 98, and the total increase for 
all groups of commodities, 105.^ 

The annual figures of the Statist thus indicate that prices 
rose from 85 in 1913 and 1914, to 108 in 1915, to 136 in 1916 
and to 174 in 1917:2 The monthly figures show an even 
greater increase for the latter part of 191 7 and the beginning 
of 1918, the December index number having reached 185. i. 
This brought the average wholesale prices close to the highest 
level that has been ever touched by them since we have had 
any statistical data available for comparative purposes. 
The earlier the period under consideration, the less reliable 
are the data, but, assuming the correctness of Professor 
Jevons's figures, the average for 1809 was 189 and for 18 10, 
171, the next highest level having been reached in 1818, when 
the index number was 159.^ 

Since 19 13 (the prewar year) monthly fluctuations of the 
index numbers of the 45 commodities included in the Statist's 
list were as follows: 

MONTHLY FLUCTUATIONS OF THE INDEX NUMBERS" OF 45 



COMMODITIES 1867-77=100* 



January. . 
February . . 
March . . . . 

April 

May 

June 

July 

August. . . 
September . 
October. . . 
November . 
December . 
Year 



1913 



1914 1915 



1916 



1917 



1918 



86 


4 


83 


5 


96.4 


123 


6 


159-3 


186.2 


86 


4 


83 


8 


100.9 


127 





164.0 


187-3 


86 


7 


82 


8 


103.7 


130 


4 


169.4 




86 


2 


82 


3 


105.9 


134 


2 


173.0 




85 


7 


82 


3 


107.2 


135 


4 


1750 




84 


I 


81 


2 


106.4 


131 





180.4 




84 


2 


82 


4 


106.4 


130 


5 


176.9 




«5 





87 


9 


107.0 


134 


5 


175-7 




85 


7 


89 


3 


107.8 


134 


4 


176.4 




84 


5 


89 


8 


IIO.O 


141 


5 


180.6 




83 


3 


88 


8 


113. 1 


150 


8 


182.9 




83 


8 


91 


6 


118. 4 


154 


3 


185. 1 




«5 




85 




108 


136 




174 





" The twelve monthly figures of each year do not in all cases exactly (at any 
rate in the decimals) agree with the annual averages, as the latter are partly 
calculated from revised figures. 



1 Editor of The Statist: "Wholesale Prices of Commodities in 1917, 
of the Royal Statistical Society, March, 1918, pp. 334-338. 
^ The Statist, January 19, 1918, p. 203. 

^ Journal of the Royal Statistical Society, Msirch, 1917, p. 291. 
* Ibid., March, 1918, p. 336. 



Journal 



i6 



PRICES AND PRICE CONTROL DURING THE WAR 



WHOLESALE PRICES OF COMMODITIES FROM 



No. of Articles . 



Month 



JUNE, 1914, 

8 7 

Vege- Animal 

table Food 

Food (Meat 

(Corn, and 

etc.) Butter) 



TO DECEMBER, 19171 

4 19 7 

Sugar, 



1914 
June . . 
July... 
Aug. . . 
Sept. . . 

Oct 

Nov. . . 
Dec. . . . 



66.5 

71-9 

81.9 

87.1 

86.7 

90 . 6 

93-2 

1915 

Jan 102.3 

Feb 109 -3 

Mar 105.6 

April 109.0 

May I ID. I 

June 103.0 

July 105.4 

Aug 105.6 

Sept loi .1 

Oct 1 10. 3 

Nov 1 13 -3 

Dec 117. 6 

1916 
Jan 



125-7 
127.2 
122.5 
133-2 
128.4 



Feb 
Mar. 
April 
May 

June 120.0 

July . 120.4 

Aug 129.4 

Sept 133.6 

Oct 152.3 

Nov 164.0 

Dec 173 -I 

1917 

Jan 179. 1 

Feb 177-4 

Mar 187. 1 

April 189.9 

May 186.9 

June 189.6 

July 174- 1 

Aug 168.0 

Sept 162.5 

Oct 162.9 

Nov 161 .5 

Dec 160.8 



97-5 
101.5 
103.6 
loi .0 
100. 1 

98.4 
104.3 



107.0 
112. 1 
123.7 
125.0 
134-5 
127-5 
130.3 
131-8 
129.3 

123-4 
120.4 
128. 1 



127 
137 
147 
153 
165 
152 
150 

154 
146 

154 
156 
168 



Coffee, 

and 

Tea 



175 


8 


96. 


184 


3 


100. 


187 


6 


104. 


190 


I 


104. 


197 


5 


105. 


206 





no. 


201 


6 


107. 


193 


7 


116. 


187 


7 


120. 


189 


7 


131- 


191 


6 


132. 


196 


7 


135- 



72.8 

79-0 

84.8 
87.1 

893 

88.2 

86.3 
85-6 
86.0 
90.1 
91 .6 
95-0 



Food Miner- 
als 



51-8 


74-8 


96. 


50.0 


78.2 


94- 


67.7 


86.9 


98. 


66.9 


88.0 


96. 


65.0 


87.0 


94- 


63.8 


87.8 


97- 


63.0 


90.9 


99- 



96.3 
01.3 

04.7 

07.1 
II .1 
05-8 
07.7 
08.1 
05.2 
06.2 
06.5 
II. 4 



15 


3 


143- 


20 


8 


149. 


23 


7 


157- 


30 


8 


159- 


33 


9 


157- 


25 


4 


152- 


24 


3 


151 


29 


7 


154 


28 


I 


155 


39 


9 


157- 


46 





163 


55 





158 



60.5 
63-7 

70.0 
72.0 

73-7 
79.0 

70.3 
66.6 
63.0 
66.2 
66.5 
68.6 



05-3 
09.1 

15-7 
18.6 
19.6 
26.6 
21 .2 
19.6 
21 .6 
23-9 
30.9 
36.0 



Tex- 
tiles 



80.6 
83-1 
83.0 
80.9 

82.5 
72 .2 
77.8 



82 
86 

87 
88 
86 
90 
89 
92 
98 
100 
104 



119. 2 
116. 9 

118. 1 
119. o 
119. 8 
122 .6 
123.8 
128.9 
130.9 
137.0 

151. 
150-4 

157.8 
167.7 

174-4 
172.7 
180.6 
200.1 

201 .2 
198.7 

204. 1 

213-4 
216.9 
216.5 



Sun- 
dries 



82 



93 
96 

97 
97 



lOI 


I < 


105.4 I( 


106.3 I< 


108.4 I< 


107-5 I« 


106.2 I< 


107. 1 I< 


107.7 I( 


no. 2 I 


114. 7 I 


119. 2 I 


123.9 I 


128.8 I 


131 


I I 


133 


5 I 


135 


2 I 


135 


9 I 


133 


7 I 


132 


6 I 


133 


8 I 


134 


I I 


137 


5 I 


150 


5 I 


152.9 I 


156.9 I 


162 


5 I 


165 


2 I 


179 


7 I 


175 


4 I 


175 


3 I 


175 


2 I 


179 


I I 


185 


4 I 


188 


7 I 


191 


9 I 


197 


8 I 



26 



Mate- 
rials 



96.5 
00.6 
03.0 
05.0 

04 -3 
06.9 

05-5 
06.3 
09.6 
12.7 
17.9 
23-4 



■5 


85- 


-7 


85- 


•4 


88. 


.2 


90. 


.8 


91- 


.1 


89. 


•7 


92. 



Journal of the Royal Statistical Society, March, 1918, p, 340. 



GREAT BRITAIN 



17 



The two following tables show by groups of commodities 
the changes which have occurred during the past five years, 
the first table giving a comparison of the annual index num- 
bers, the second of the numbers at the close of each year. 

COMPARISON OF WAR AND PREWAR ANNUAL INDEX NUMBERSi 

Increase % Increase % 

1916 on 1917 on 

1915 1913 1916 1913 

+22.8 +92.1 +31 +150 



No. of 

Articles 

8 

7 

4 



19 

7 

8 

II 

26 



Veg. food . . . 
Animal food 
Sugar, coffee 

and tea 
Foodstuffs 
Minerals . 
Textiles . . 
Sundries . 
Materials 
Total 



Annual Index Numbers 
1917 1916 1915 1914 1913 
174 133 108 75 69 
192 152 126 100 99 



+21. 1 +53 



113 86 70 58 54 +22.7 +61 

130 107 81 77 +22.1 +69 

172 158 126 99 III +26.0 +44 

192 129 92 81 84 +39.4 +53 

174 136 109 87 83 +25.4 +63 

179 140 108 88 91 +29.3 +54 

136 108 85 85 +26.3 +59 



5 +26 +96 

2 +31 +111 

3 +29 +113 

4 +8 +55 
9 +49 +130 

5 +28 +109 
I +28 +98 
9 +28 +105 



COMPARISON OF WAR AND PREWAR MONTHLY INDEX NUMBERS^ 

Increase % 
Index Numbers Dec, 1917 on 

1916 1915 1914 1914 1916 1914 
'~ (Dec. (Dec. (June (Dec. (June 

31) 31) 30) 31) 30) 

I 117. 6 93.2 66.5 —7.1 +141. 6 

7 128. 1 104.3 97.5 +16.6 +101. 7 
o 69.8 63.0 51.8 +42.2 +161. 2 
o III. 4 90.9 74.8 +8.8 +125.2 
9 136.0 99.8 96.7 +9.4 +79-9 
4 III. 7 77.8 80.6 +43.9 +168.5 
9 123.9 97.7 82.5 +29.3 +139-6 

8 123.4 92-1 85.7 +28.1 +129.8 
3 118. 4 91.6 81.2 +20.0 +128. 1 



No. of 
Articles 

8 

7 

4 
19 

7 

8 
II 
26 
45 



1917 
(Dec. 

31) 

Veg. food 160.8 

Animal food 196.7 

Sugar, coffee and tea 135.1 

Foodstuffs 168.6 

"Minerals 173-9 158 

Textiles 216.5 150 

Sundries 197-8 152 

Materials 197 . 1 153 

Total 185. 1 154 



(Dec 
31) 
173 
168 

95 
155 



The index numbers of the Economist tell a similar story. 
The general level of prices rose from 116. 6 at the end of July, 
1914, to 149. 1 for the same date in 1915, to 191. i in 1916, 
to 254.4 ii^ 191 7 a^i^d to 265.7 on the last day of December, 
1 91 7. The advance continued through 1918 and in April 
the index number reached 270.0.^ How each group of com- 
modities, according to the Economist, contributed to the rise 
may be seen from the two tables which follow. The first 
table gives the rise in points for yearly periods,^ the second 
indicates the monthly fluctuations.^ 

1 Journal of the Royal Statistical Society, March, 1917, p. 290; and March, 1918, 
p. 338. 

2 The Statist, January 19, 1918, p. 103; or Journal of the Royal Statistical Society, 
March, 1918, p. 339. 

^ The Economist (London), May 4, 19 1 8, p. 702. 

* Ibid., February 16, 1918, p. 258. 

* Ihid., May 4, 1918, p. 702. 



PRICES AND PRICE CONTROL DURING THE WAR 



Cereals and meat . 
Subsidiary food . . 

Textiles 

Minerals 4645 

Miscellaneous . 

Total index number 2,565 

» Decline. 







Rise during Periods 




Group 


From 


From 


From 


From 


From 


total 


July 31. 


Dec. 31, 


Dec. 31, 


Dec. 31, 


July 31. 


at July 


1914, to 


1914, to 


1915, to 


1916, to 


1914, to 


31, 1914 


Dec. 31, 


Dec. 31, 


Dec. 31, 


Dec. 31, 


Dec. 31, 




1914 


1915 


1916 


1917 


1917 




Points 


Points 


Points 


Points 


Points 


579 


135, 


183 


397 


^-7i 


7075 


352 


62 1 


3ii 


107 


133 


334 


6i6i 


^-1071 


222 


393 § 


560 


1,068 


4643 


11^ 


2355 


112 


15, 


375 


535 


1335 


162 


263§ 


236^ 


795? 


2,565 


235 


834 


1.273 


937 


3,280 



Date 



Basis (average 1 90 1-5) 

Jan. I, 1914 

April I, 1914 

July I, 1914 

End July, 1914 



Aug. 

Sept. 

Oct. 

Nov. 

Dec. 

Mar., 

June 

Sept. 

Dec. 

Mar., 

June 

Sept. 

Dec. 

Jan., 

Feb. 

Mar. 

April 

May 

June 

July 

Aug. 

Sept. 

Oct. 

Nov. 

Dec. 

Jan., 

Feb. 

Mar. 

April 



1915- 



1916. 



1917. 



1918. 



^ 


^ ^ 






i!^H 




U 


-a 


X) ^ 






>o- 






c 

U 
U 


3 
OCT) 






t/3 

c 


Miscellane 
(Rubber 
Oils, etc 




B 
OJ 

u 
u 

OJ 


500 


300 


500 


400 


500 


2,200 


1 00-0 


563 


355 


642 


491 


572 


2,623 


1 1 9-2 


560 


3505 


626I 


493 


567 


2,597 


1 18-0 


565i 


345 


616 


4715 


551 


2,549 


115^ 


579 


352 


6i6i 


4645 


553 


2,565 


1 1 6-6 


641 


369 


626 


474, 


588 


2,698 


122-6 


646 


405 


6ii| 


4725 


645 


2,780 


126-4 


656I 


400 5 


560 


458 


657 


2,732 


124-2 


683 


4075 


512 


473 


684i 


2,760 


125-5 


714 


4145 


509 


476 


686* 


2,800 


127-3 


840 


427 


597 


644 


797 


3,305 


150-2 


818 


428 


601 


624 


779 


3,250 


147-7 


809I 


4705 


667 


6195 


7695 


3,336 


151-6 


897 


446 


731 


7115 


848* 


3,634 


165-1 


9495 


503 


796i 


851 


913 


4,013 


182-4 


989 


520 


794 


895 


1,015 


4,213 


191-5 


1,018 


536i 


937 


858i 


1,073 


4,423 


201-0 


1,294 


563 


1,1245 


824^ 


1,112 


4,908 


223-0 


1,310 


561 


1,137 


825* 


1,1195 


4,953 


225-1 


I,3I2| 


58 1 5 


1,189 


829* 


1,1595 


5,072 


230-5 


1,346 


610^ 


1,226 


8345 


1,283 


5,300 


240-9 


1,362 


642 


1,240 


842 


1,293 


5,379 


244-5 


i,376| 


648 


I,26l| 


839i 


1,286* 


5,412 


246-0 


1,4325 


652 i 


1,441 


841 1 


1,278* 


5,646 


256-6 


1,3335 


607 


1,512 


840 


1,296* 


5,589 


254-4 


1,342 


670 


1,5045 


830 


1,311* 


5,658 


257-1 


I,22l| 


726 


1,5095 


822I 


1,354* 


5,634 


256-1 


I,226i 


724 


1,5755 


824 


1,351 


5,701 


259-1 


1,236^ 


679 


i,66o| 


848 


1,344 


5,768 


262-2 


i,286| 


686 


1,684^ 


839* 


1,348* 


5,845 


265-7 


1,221^ 


686 


1,7195 


829 


1,329 


5,785 


262-9 


1,235 


693 


1,733 


838 


1,319 


5,818 


264-4 


1,238 


697 


1,777 


836 


1,319 


5,867 


266-6 


1,244 


7445 


1,760 


850 


1,342* 


5.941 


270-0 



GREAT BRITAIN 



19 




The Economist, February 16, 1918, p. 259. 



The two preceding tables and the chart show that the price 
of cereals and meat rose steadily until December 31, 191 6, the 
increase having been particularly pronounced during the lat- 
ter year. The prices fell sharply in the late summer of 191 7 on 
the institution of the nine penny loaf and controlled beef and 
mutton quotations. But even this group was creeping up 



20 PRICES AND PRICE CONTROL DURING THE WAR 

again before the end of the year. Until the beginning of 191 6 
there was a comparatively slow advance In the price of sub- 
sidiary foodstuffs; since then, however, a more rapid rise took 
place. The price of textile materials, particularly of cotton, 
declined during the first few months of the war, but a reaction 
towards higher prices set in In 191 5 and continued through 
1916 and 1917, the rise having been particularly rapid during 
the latter year. This placed textiles at the head of the Econ- 
omist's list, while they occupy the second place according to 
the calculations of the Statist; however, the Statist's figures 
for December, 191 7, show for textiles also the greatest ad- 
vance over the prices on June 30, 1914. The price of minerals 
was hardly affected during the early stages of the war, the 
greatest Increase occurring In 191 5 and 191 6, when the price 
rose 347I points, as compared with only 15 points for 191 7. 
The miscellaneous group, which includes leather, rubber, oils, 
showed a sharp rise upon the declaration of war and, with 
the exception of slight declines In the summers of 191 5 and 
191 7, the increase In price for this group has been continuous. 

In percentages, the least Increase appeared In metals, which 
rose 82.5 per cent, and the greatest Increase in textiles, 
which rose 169.3 per cent. The cereal and meat group went 
up 1 13.8 per cent and other foodstuffs 92.9 per cent.^ 

The Index numbers of the Board of Trade are based upon 
the price movements of forty-seven principal articles, weighted 
in accordance with their estimated consumption in 1 881-1890. 

The results of the Board of Trade calculations for the past 
five years were as follows: 

^Labour Gazette (Canadian), January, 1918, p. 46. 



GREAT BRITAIN 21 

THE BOARD OF TRADE (UNITED KINGDOM) INDEX NUMBERS OF 
WHOLESALE PRICES OF 47 ARTICLES 1 
(Base Year 1900=100) 

Food, All 
Coal' Textiles Drink Articles 
Year and (Raw and Miscel- Corn- 
Metals Materials) Tobacco laneous bined 

1913 92.5 1350 117. 7 109.4 116. 5 

19 14 (January-July) 86.2 135. i 114. 8 106.2 113. 6 

19 14 (August-December) . 88.8 116. 8 130.4 119. i 122.6 

1914 (Year) 86.7 128.8 120.9 iii-3 117. 2 

1915 116. 7 II9-8 1541 143.8 143.9 

1916 165.8 180. 1 189.4 204.4 186.5 

1917 182.0 270.1 246.1 256.0 242.9 

The miscellaneous group comprises such articles as petroleum, parafifin wax, cot- 
ton seed, wood and timber. 



In the coal and metals group the greatest rise occurred in 
1 91 6, when there was an increase of 42 per cent over the figure 
for 1915. In 1917 the index number was 10 per cent higher 
than in 1916. Zinc and lead show decreases compared with 

1916, while the other items in the group increased in price. 
The figures for textiles (raw materials) show an average 

rise of about 50 per cent in 191 6 over 191 5 and of 50 percent 
again in 191 7 over 1916. This was due principally to ad- 
vances in the price of raw cotton and flax, which increased 
74 per cent and 71 per cent, respectively, in 191 6 and in 

1917. The index number for the group relating to food, 
drink and tobacco increased by nearly 30 per cent over the 
number for 191 6, each of the items in the group, except cocoa 
and hops, contributing to the increase. 

In the group of miscellaneous items, petroleum shows a 
decrease of 6 per cent and rubber an increase of less than one- 
half of I per cent. The other items show large increases, 
ranging from 22 per cent to 45 per cent, the figures for the 
whole of the group representing an increase of 25 per cent over 
those for the previous year. 

Comparing the figures for 191 7 with those for 1913, it will 
be seen that there was a rise of 97 per cent in the index num- 
ber of the coal and metals group, of 100 per cent in textile 
raw materials, of 109 per cent in the food, drink and tobacco 

^Labour Gazette (British), January, 1918, pp. 6-7. 



22 PRICES AND PRICE CONTROL DURING THE WAR 

group and of 134 per cent in the group of miscellaneous 
materials, the general Index number showing a rise of 108.5 
per cent.^ 

The yearly average wholesale prices of commodities con- 
sidered in the Statist's groups fluctuated since 191 3 (the pre- 
war year) as follows :^ 

1913 1914 1915 1916 1917 

Vegetable Food: 

f English Gazette, s. and d. 

Wheat: ■{ per qr 31.9 35-0 53.11 58.5 75.9 

[ American, s. and d. per qr.. . 36.5 40.1 59-10 67.7 85.3 

f Town made, white (now 
Flour: \ "G.R.") s. per sack (280 

i lbs.) 305 33i 49 52^ 581 

r, 1 / Endish Gazette, s. and d. 

^^'^^y- [ perqr 27.3 

Oats: English Gazette, s. and d. per qr. 19 . i 
Maize: American mixed, s. per qr. . . . 23! 
Potatoes:" Good English, s. per ton. . 78 
•p. / Rangoon cargoes to arrive, s. 
^'^^- \ andd. percwt 8.2 

Animal Food: 

■rj r. / Prime, d. per 8 lbs 54 

^^" \ Middling, d. per 8 lbs 49 

Tv/r ^-^. / Prime, d. per 8 lbs 62 

Mutton: | Middling, d. per 8 lbs. ... 56 
T, , / Large and small, average, d. 

^°^^= \ per 8 lbs 55 

Bacon: Waterford, s. per cwt yy 

P f Friesland, fine to finest, s. 

\ percwt 119 120 141 191 173 

Sugar, Coffee and Tea: 

' British West India refining, s. 

per cwt 9I 

c Beet, German, 88 p. c.,f.o.b., 

^"Sar: ] g. per cwt 9I 

Java, floating cargoes, s. per 

cwt lof 

1913 
Sugar, Coffee and Tea (Cont.) : 

f Ceylon plantation, low mid- 
Coffee: ] dling,'' s. per cwt 81 

[ Rio, good, s. per cwt 53 

i Congou, common, d. per lb. . . 5 
Indian good medium, d. per lb. 8 J 8f io| lof 

Average import price, d. and 
dec. per lb 9.06 9.19 11. 01 11.29 «I4.68 

«■ The annual prices are the average monthly or weekly quotations, except 
potatoes, which are the average weekly quotations during the eight months Jan- 
uary to April and September to December. 

b Meat (9-13), by the carcass, in the London Central Meat- Market. 

" Comparative values. 

"^ East India good middhng from 1908. 

* Approximate. 

^Labour Gazette (British), January, 1918, p. 6. 

^ Journal of the Royal Statistical Society, March, 1918, pp. 344-349. 



27 .2 


37-4 


51-7 


64. 10 


21 .0 


30.9 


33-5 


51,7 


29I 


41^ 


52 1 


7ii 


71^ 


93i 


153I 


186^ 


9.1 


13-3 


16. 10 


253 


56i 


72I 


8ii 


104I 


52i 


67I 


761 


lOI 


64 


75i 


93i 


182 


57* 


69f 


861 


199 


49, 


72 


87f 


212 


75i 


93i 


109! 


191 



III 


I4f 


24i 


31I 


I2| 


•17I 


-=221 


'25l 


I3f 


i8f 


26| 


32f 


1914 


1915 


I916 


I9I7 


79 
45 
6 


78^ 
43 i 
8| 


77l 

50 

8 


94f 

58 

i6f 



57-1 


71.2 


90.0 


95-7 


51. o 

7 
59l 


65.2 

72f 


84.0 

I3f 
ii5f 


89.7 

I3f 

124? 


64* 
151 
I9l 


82 i 

164 

24 


134 
182 

32I 


I36i 
32I 


2l\ 

14I 


2li 


^27i 

4ii 


«27l 

30 



6.41 


5,87 


9.00 


16.55 


4A 


4f 


7 


I3f 


33 


59 f 


761 


ii3i 


38 


661 


85i 


«i5if 


261 


4ii 


54l 


84I 


43 


6o§ 


71 


105I 


27i 


2li 


31 


39I 



GREAT BRITAIN 23 

Minerals: 

1 Scottish pig, s. and d. per ton . 65 . 6 
Cleveland (Middlesbrough) 
pig, s. and d. per ton 58.3 
Bars, common, £ per ton 7f 
Chili bars, £ per ton 68 
English tough cake, £ per 
ton 72,\ 

Tin: Straits, £ per ton 201 

Lead: English pig, £ per ton 19I 

' Wallsend Hetton in London, 

s. per ton 21^ 

Coal: i Newcastle steam, s. per ton. . 15^ 
Average export prices, s. and 

dec. per ton 13-94 13-65 16.96 24.64 27.16 

Textiles: 

{ Middling American, d. per 

Cotton: \ lb 7 .01 

[ Fair Dhollerah, d. per lb. . . . ^{^ 

f Petrograd, £ per ton 34 

Flax: \ Russian, average import price, 

[ £ per ton 4ii 

TT / Manila fair roping, £ per ton 31! 
nemp. | pg^j-ogj-ad clean, £per ton. . 38 
Jute: Good medium, £ per ton 26^ 

1913 1914 1915 1916 1917 
Textiles (Cont.) : 

' Merino Port Philip average 

fleece, d.f per lb 18 i8| 2if 32I 46^ 

Merino Adelaide, average 

grease, d. per lb 9? 9I lo| 16^ 23J 

English, Lincoln half hogs, 

d. per lb I2f 

Silk: Tsatlee, s. per lb 11 

Sundry Materials: 

(River Plate dry, d. per lb. . . I2| 
River Plate salted, d. per lb. 9I 
Average import price, d. 
and dec. per lb 8 .62 

f Dressing hides, d. per lb. . . 19! 
Leather: \ Average import price, d. 

[ per lb I9i 

Tallow: Town, s. per cwt 34I 

f Palm, £ per ton 35 j 

Oil: \ Olive, £ per ton 49^ 

[ Linseed, £ per ton 24! 

Seeds: Linseed, s. per qr 45I 

Petroleum:^ Refined, d. per gall 8^ 

Soda: Crystals, s. per ton , . . 47^ 

Nitrate of Soda: s. per cwt ii| 

Indieo- /bengal good consuming, s. 
° ' \ per lb 2I 

(Hewn, average import 
price, s. per load 40 
Sawn or split, average im- 
port price, s. per load ... 63 

^ Approximate. 

'Port Philip fleece washed nominal since 1895, exactly in proportion with the 
value of clean wool. 

«■ Petroleum as compared with the average from 1873-77 only. 



Wool: 



I2t 


I7f 


20 


20i 


io| 


9H 


I6i 


2li 


13* 


13 


14I 


20 


9h 


II 


n\ 


16 


9. II 


10.04 


11.70 


15-52 


2li 


28f 


28I 


35 


I9f 


2lf 


27 


34I 


3ii 


361 


46I 


62i 


37i 


34H 


44? 


46 


50^ 


51I 


59i 


ii5f 


24^ 


30I 


4ii 


56I 


48^ 


57f 


80^ 


II2i 


7f'« 


8H 


12 


i6i 


47 § 


48f 


78f 


89! 


loi 


I2f 


ni 


25 


5f 


I3f 


I3f 


loi 


41I 


58I 


82I 


97f 


64I 


94i 


I48i 


210 



24 prices and price control during the war 

Retail Prices 
Food 

The records of retail prices of food paid through the United 
Kingdom in cooperative stores and other shops largely patron- 
ized by the working people are collected by the Board of 
Trade and summarized month by month in the Labour Gazette. 
It is to be regretted that no complete detailed data are given 
regarding actual retail prices of various commodities, the 
monthly tables presenting but average percentage increase 
since July, 19 14, and the text commenting on price fluctua- 
tions of selected articles.^ 

Retail prices of food began to move upward on August i, 
1914, and by August 8 they rose as much as 15 or 16 per cent 
above the "normal prices in July."^ After that there was a 
fall in the price of most articles, so that at the beginning of 
September the average increase was approximately 10 per 
cent, but by December, 1914, the increase reached again 16 
per cent. To some extent, the advance was due to sea- 
sonal changes, as such articles as eggs and butter always be- 
come dearer towards winter. The greater part of the rise, 
however, must be attributed to other causes. The average 
percentage increase at the end of the year 1915 w^as 45 above 
the prices prevailing immediately before the war. The great- 
est rise took place in the latter part of 191 6, making the price 
level towards the end of that year about 87 per cent higher 
than it was in July, 1914. Prices continued to advance until 
July, 1917, when the recorded increase was 104 per centj 
since then, with the exception of a decline in September, 
there has been very little change. The decline was caused by 
the fixing of maximum prices for certain staple foods and, 
as can be seen from the following figures, was of very short 

1 The Board of Trade figures are based upon between 500 and 600 returns of 
predominant prices, relating to prices in a number of shops in every town in the 
kingdom with over 50,000 population, in about 200 towns with populations from 
10,000 to 50,000 and in about 250 smaller places. The articles included are beef 
and mutton (British and imported), bacon, fish, flour, bread, tea, sugar, milk, 
butter, cheese, margarine, eggs and potatoes. 

* Labour Gazette, January, 1915, p. 6. 



GREAT BRITAIN 25 

duration. The average percentage increase in retail prices 
of the principal articles of food from month to month since 
the beginning of the war was as follows:^ 

Month (beginning of) 1914 1915 1916 1917 

January 18 45 87 

February 22 47 89 

March 24 48 92 

April 24 49 94 

May 26 55 98 

June 32 59 102 

July 325 61 104 

August 15 34 60 102 

September 10 35 65 106 

October 12 40 68 97 

November 13 41 78 106 

December 16 44 84 105 

Taking up the various commodities included in the Board 
of Trade averages, one finds that the prices of British meat 
have not shown much increase during the latter part of 19 14, 
but imported meat has become much dearer than before the 
war. Percentage increase since July, 1914, was on January i, 
1915, for chilled or frozen beef ribs, 18, thin flank, 32 (these 
are increases which took place in large towns). The prices of 
British meat advanced steadily in the early months of 1915; 
at the beginning of May they reached an increase of about 20 
per cent above those which prevailed in July, 1914. During 
May there was an advance of about 14 per cent, and an 
additional rise of 6 per cent took place in June. The fluctua- 
tions were not very great during the second half of the year. 
The course of prices of imported meat was somewhat similar, 
but the proportionate increase was 10 to 15 per cent greater. 
The year 1916 opened with butchers' meat averaging retail 
about 3d. per pound above the level of prices in July, 1914, 
and during the first three months of the year there was a 
steady upward movement in prices. 

During April and May there occurred a very marked general 
rise; the average increase in price was about 15 per cent, 
varying from i jd. per pound for the cheapest cuts of imported 
meat to nearly 2d. per pound for ribs of British beef. From 

'^Labour Gazette, December, 1917, p. 438; also The Economist, February 16, 
1918, p. 258. 



26 PRICES AND PRICE CONTROL DURING THE WAR 

June I to December i, 1916, there was very little movement 
in meat prices; they averaged about 5^d. per pound above 
those of July, 1914. Farther advances of 2 to 3 per cent took 
place during December and on January i, 191 7, average per- 
centage increase since July, 1914, was from 64 for British beef 
ribs to loi for imported thin flank. Prices of British meat in- 
creased by about 3! d. per pound between the beginning and the 
summer of 1917; in July of that year advances in price ranged 
from 100 to over 190 per cent in comparison with July, 1914, 
which was equivalent to average increases of 7^d. to io|d. per 
pound, according to cut. As may be noted, in 1915, 1916 and 
in 191 7 up to September, prices showed a continuous rise dur- 
ing the first half of the year, followed by comparatively little 
change during the second half. In 191 7 the action of the Food 
Controller resulted in a substantial decrease in the price of 
British beef and mutton after September i. It declined to the 
extent of about 2jd. per pound, so that prices at December 
I, 1917, were 7d. per pound above the level of July, 1914. 
With imported meat, the increase during the summer and 
the subsequent decrease since September were less than with 
British meat, the decrease amounting to about f d. per pound. 
The price of bacon was on August 8 about 15 to 20 per cent 
above that of the previous month ; after this rise it showed an 
almost continuous decline until the end of November, 191 5; 
between then and January i the price recovered so that at 
January i, 191 6, the percentage increase was about 31. Bacon 
rose in price very little— less than id. per pound, or about 5 
per cent, during the first seven months of 191 6. In August, 
however, there was a 5 per cent increase, the advance contin- 
uing so that prices at the end of 191 6 were 56 per cent higher 
than in June, 19 14. The advance was very pronounced in 
1917, being especially accelerated during August-October, so 
that, while the increase from April, 191 5, to July, 1 91 7, 
averaged about |d. a pound per month, in the three above 
mentioned months in 1917 it averaged ifd. per month. The 
total increase during 191 7 was about 9d. per pound and on 
January I, 1918, the percentage level was 139 above July, 19 14. 



GREAT BRITAIN 2/ 

There were considerable fluctuations in the price oifish; on 
January 1, 1915, the prices showed an increase since July, 1914, 
of 5 1 per cent for large towns, and of 3 1 per cent for small towns 
and villages. The prices rose steadily throughout the year. 
At January i, the increase over July, 1914, reached 97 per 
cent. It went up to 105 per cent at the beginning of February. 
Then a decline set in and in July, 1916, fish sold at about 80 
per cent above the level of two years earlier, being the lowest 
point reached during the year. A subsequent rise brought 
the price up to 97 per cent over the July prewar level. The 
movements in the price of fish were irregular through 1917, 
but the tendency was always upwards, and since August 
successive advances brought the prices to nearly treble of 
what they were in July, 19 14. 

There was a sharp rise in the price oi flour in 19 14, the ad- 
vance having amounted to about 20 per cent by the end of 
the first week in August. As in the case of sugar, prices fell 
after the panic ceased and then rose again, so that at January 
I they reached once more the 20 per cent increase over the 
level in July. Bread increased only half as much as flour at 
the beginning of August (11 per cent), the advance by the end 
of the month being 8 per cent. As with flour, no important 
changes took place then until November, but during Novem- 
ber and December there was a rise amounting to 5 to 6 per 
cent, so that at January i, 1915, bread was about 16 per cent 
higher than in July, 19 14. The prices of both flour and bread 
increased sharply during January and February, 191 5, the 
increase continuing, though less rapidly, up to a maximum 
at the beginning of June, when flour was about 55 per cent 
and bread 45 per cent dearer than just before the war. Prices 
then declined until November, but during the last two months 
of the year upward movements were resumed. The average 
price of bread at the beginning of 1 9 1 5 was 6|d. for 4 pounds ; on 
June I it reached 8|d. and on January i it fell to 8|d., as com- 
pared with 5fd. in 1914, before the war. In the first eight 
months of 191 6 the price fluctuated between 8^d. and 9d. per 
4 pounds. Subsequent Increases brought the average to 9fd. 



28 PRICES AND PRICE CONTROL DURING THE WAR 

at November i and rod. at December i. Expressed in per- 
centage form, the price of bread at the end of 1916 was 73 
per cent above the level of July, 1914; at the end of 1915 it 
was about 42 per cent above this level. The retail prices of 
flour advanced proportionately more than those of bread 
during the year, viz., from 49 per cent at January i, 1916, to 
88 per cent at January i, 191 7, above the prices prevailing 
immediately before the war. The average price of bread rose 
from about lod. per 4 pounds on January i, 191 7, to 11 §d. in 
May, after which it remained almost stationary until the 
introduction of the subsidized 9d. loaf on September 17. 
The movements in the price of bread corresponded to those of 
flour. 

The 14 per cent increase in the price of tea at January i, 
191 5, was caused by the increase in the duty (3d. per pound 
in November, 1914). From January to September, 1915, the 
aggregate increase was nearly 3d. per pound or 50 per cent 
over the July, 19 14, level. In September an additional duty 
of 4d. per pound was imposed and prices advanced by an 
average of 3^d. per pound, so that by the end of the year tea 
was 48 per cent higher than before the outbreak of the war. 
During 1916 movements in the retail price of tea were insig- 
nificant, and 1 91 7 found tea only about 3 per cent higher than 
it was at the beginning of 191 6; this represents an increase of 
about 9d. per pound, 7d. of which is accounted for by an in- 
creased duty. In 1917 there was a continuous rise in the price 
of tea, which advanced from 2s. 4d. per pound at the begin- 
ning of the year to 3s. 2d. at the beginning of December. It 
declined then about ifd. per pound, and at January, 1918, 
the price was 98 per cent above the July, 19 14, level. 

Sugar rose on August 8, 19 14, to 80 and 90 per cent above 
the level in July. It fell somewhat and then rose again, at 
the beginning of January, 1915, the price of granulated sugar 
being two-thirds higher than at the beginning of the war. 
The price remained unchanged, usually at 3§d. per pound, 
from January to September, 191 5, but in that month it rose 
to 4d. per pound in most parts of the United Kingdom. 



GREAT BRITAIN 29 

Sugar was 2cl. per pound just before the war. In the first three 
months of 1916, the price rose to 4fd. per pound. In April there 
was an increase of |d. per pound because of increased duty. 
Since that time small monthly increases occurred which have 
in the aggregate raised the average price to 5^d. per pound. 
Of this, i|d. is attributable to duty. There was no change 
in price up to the beginning of May, 191 7. An increase then 
took place, and from July to the end of the year the price was 
6d. per pound. 

The slight advance in the price of milk during the latter 
part of 1914 (it was 6 per cent on January i, 1915) was 
purely seasonal. There were few changes in the price of milk 
until September, 1915. At the beginning of this month the 
average price was 12 per cent above that of July, 1914, and 
at the beginning of January, 191 6, the corresponding figure 
was 29 per cent, which represents an increase from 3^d. to 4|d. 
per quart. The average retail price of milk was about 4|d. 
per quart during the first four months of 191 6 and 4fd. from 
May I to August. In September an upward trend in prices 
set in, which continued throughout the rest of the year and 
brought the price to nearly 5^d. per quart at the beginning 
of 191 7. This represented a 57 per cent increase over July, 
1914, prices. Milk averaged 5 |d. per quart from January to 
September, when an advance began which raised the average 
price to 7d. at the beginning of 1918, about double the level 
ofjuly, 1914. 

Butter, after a marked rise in August, rapidly fell to little 
above normal; an increase in price during September, October 
and November may be ascribed to season. An additional 
rise of 5 per cent occurred between December i and January 
I, on which date butter was about 14 per cent higher than in 
July, 1914. During the first part of 1915, barring slight 
fluctuations, butter remained steady at about 15 per cent 
increase over July, 1914. From July, 1915, to October it 
rose very substantially, reaching an increase of 34 per cent in 
the latter month. In 191 6, the prices remained fairly steady 
at this level from January until August. During the latter 



30 PRICES AND PRICE CONTROL DURING THE WAR 

month and in each of the remaining months of the year a 
substantial increase was recorded, so that at the end of the 
year butter was about 30 per cent dearer than at the beginning 
and 70 per cent dearer than in July, 1914. The steep rise was 
not arrested until March, 191 7, when it was nearly 80 per cent 
(over I id. per pound) dearer than just before the war. The 
advance continued, and by the beginning of October prices 
were approximately double those of July, 1914. By this 
time the prices of most butters were under control, an excep- 
tion being afforded by Danish products, which, free from 
control at the import stage, retailed at 4s. and more per pound. 
By the end of the year Danish butter was brought into line 
with other butter; the price of butter has been reduced to 
about the level of October i, 1917, viz., 2s. 5d. per pound, or 
about double the July, 1914, price. 

Cheese was not affected greatly by the panic in the early 
part of August, 1914. During the period September to 
December the price rose 5 per cent and at the end of the year 
it reached a level of 10 per cent above that in July, 19 14. A 
steady advance continued throughout the first half of 1915, 
the total increase during the six months being 20 per cent, 
or 2d. per pound. The price fell slightly and then recovered 
again. On January i, 1916, the increase over July, 19 14, 
was 32 per cent. A steady upward movement in the price 
(3 to 4 per cent a month) characterized the cheese situation 
in 1 91 6; the only exceptions to this were the months of June 
and July, in which the price declined 7 per cent, and Novem- 
ber, when a 7 per cent rise took place. At the end of 1916 
the price of cheese was about 75 per cent above the level just 
before the war. Cheese rose by 4d. per pound between Jan- 
uary and June, 191 7, at which time its average price was 
IS. 7^d. per pound, as compared with 8|d. in July, 1914. At 
the end of June, 1917, "government cheese" of colonial or 
American origin was introduced for retail sale at is. 4d. per 
pound and British cheese came under control soon afterwards. 
The result was that cheese sold at the beginning of 191 8 at 
about IS. 4fd. a pound. 



GREAT BRITAIN 3I 

During the latter part of 19 14 and through 191 5 the price 
of margarine showed very little change over prewar figures, 
apart from a rise of from 15 to 20 per cent and a subsequent 
fall in the early weeks of the war. During 191 6 there was an 
increase of a little over id. per pound, and between January 
and July, 191 7, an advance of 3|d. per pound occurred. On 
December i, 191 7, the price averaged about ^d. per pound 
lower than in July, 191 7, and 4|d. higher than just before the 
war; this amounts to iid. oris, per pound for the ordinary kind. 

After a sharp rise at the beginning of the war, the prices 
of eggs fell again to a level only about 12 per cent above that 
of July. Large advances took place from September to 
November, and on January i, 191 5, the price of fresh eggs 
showed an increase of 63 per cent above the July level, a 
part of this rise being due to the time of the year. Variations 
in 1 91 5 were largely seasonal, but prices were higher than dur- 
ing the corresponding periods in 1914. The same price situa- 
tion continued through 1916 and 191 7, eggs in July, 1916, 
being about 50 per cent higher than in the same month in 1914. 
At the beginning of December, 191 7, they were twice as dear as 
they were three years earlier, the price having risen to 4d. for an 
egg, as compared with 3|d. on January i, 1917, and 2d. in April. 

Potatoes fluctuated considerably in price from place to place. 
In large towns prices on Augusts, 1914, averaged about 15 per 
cent above those of July, while in the small towns and villages 
the increase was only 4 per cent. Subsequently, prices fell 
continuously until the end of October, when they reached a 
level below the July prices by 16 percent in the small towns 
and villages. On January i, 19 15, they were below the July 
level by II and 22 per cent, respectively. In 1915 variations 
in prices were largely seasonal and did not show much in- 
crease over the prices for corresponding periods in 19 14. At 
the end of the year the decrease for large towns was wiped 
out and the prices were about equal to those of July, 1914. 
The price of potatoes remained comparatively normal until 
April, 1 916. In that month there was a rise of over 40 per 
cent in the average price of old potatoes, and further advances 



32 PRICES AND PRICE CONTROL DURING THE WAR 

of 8 per cent In May and 31 per cent in June followed. On 
July I the average price of old potatoes was lod. per 7 pounds, 
as compared with 4fd. per 7 pounds until April. Prices of 
new potatoes on August i were 9d. per 7 pounds, dropping 
to 7^d. per pound at the beginning of September. Prices 
remained fairly stationary at this high level for some weeks 
and then a rise of 34 per cent took place in October; additional 
increases of 4 per cent for the following two months resulted 
in the prices at the end of the year averaging lofd. per 7 
pounds, or about 130 per cent higher than twelve months 
earlier. The average price of potatoes ranged from lo^d. to 
iifd. per 7 pounds in the first half of 191 7. The rise has been 
due to scarcity. When the Food Controller established a 
maximum price of ifd. per pound it was rapidly adopted in 
most places. The plentiful crop of 191 7 resulted in the price 
of potatoes falling to an average of 6fd. per 7 pounds.^ 

Taking the price of each article as reported in July, 19 14, 
as a base, the following table shows the per cent of increase 
in prices of certain articles since July, 1914.^ 

Large Towns (Populations Small Towns and Villages United 

Article over 50,000) Kingdom 

Jan. I, Jan. i, Jan. i, Jan. i, Jan. i, Jan. i, Jan. i, Jan. i, Jan. i, Jan. i, 

191S 1916 1917 1918 1915 1916 1917 1918 1917 1918 
Beef, British: 

Ribs 8 37 66 78 6 34 62 83 64 81 

Flank, thin ... . is 51 93 107 8 39 74 95 84 loi 
Beef, chilled or 
frozen: 

Ribs 18 SI 90 120 IS 43 81 113 85 116 

Flank, thin ... . 32 70 107 IS2 21 S7 96 122 loi 137 
Mutton, frozen: 

Legs 19 45 90 142 14 38 83 126 86 134 

Breast 28 70 127 109 21 56 117 134 122 162 

Bacon, streaky . 9 34 60 147 S 28 53 130 56 139 

Fish 51 119 155 223 31 75 108 169 131 196 

Flour, household 18 46 84 so 23 S2 93 54 88 52 

Bread 18 45 79 57 14 39 68 52 73 54 

Tea 14 49 51 98 13 48 so 99 SI 98 

Sugar, granulated 69 97 I73 194 6s 89 167 i8s 170 189 

Milk 6 30 S9 103 7 28 54 96 57 99 

Butter: 

Fresh 12 32 72 102 16 36 74 lOS 73 103 

Salt 10 30 70 106 14 33 71 los 71 105 

Cheese 10 32 74 91 10 32 75 91 75 9i 

Margarin s 8 2S 71 4 6 25 61 2S 66 

Eggs 62 108 179 2S2 65 102 171 233 I7S 242 

Potatoes =11 .. 138 SI ^22 »io los 23 122 37 

All above articles 
(weighted per- 
centage increase) 19 48 91 III 17 42 83 102 87 106 

» Decrease. 

^ The data for the discussion of retail prices were taken from the Labour Gazette 
for 1915, 1916, 1917 and January, 1918. 

2 Monthly Review of the U. S. Bureau of Labor Statistics, March, 1916, p. 83; 
Labour Gazette, January, 1918, p. 5. 



GREAT BRITAIN 33 

With reference to items of expenditure other than food 
there have been substantial increases, except with regard to 
rents, but the average advance has not been so great as in 
food. The increase from July, 1914, to January i, 1918, in 
the cost of all the items ordinarily entering into working class 
family expenditure, including food, rent, clothing, fuel and 
light, etc., may be estimated at between 80 and 85 per cent, 
taking the same quantities of the various items at each date 
and eliminating advances arising from increased taxation, 
and between 85 and 90 per cent, if increases due to taxation 
are included. 

The average percentage of increase between July 14, 1914, 
and December, 191 7, in retail prices of a number of groceries 
of less importance in the working class dietaries may be seen 
from the following statement : 

Per Cent Per Cent 

Lentils, split (red) 230 Milk, condensed 120 

Peas, split (yellow) 210 Beans, butter no 

Sago 190 Jam ■. 1 10 

Tapioca 160 Rice, Rangoon 100 

Syrup 160 Cocoa (loose) 95 

Beans, haricot 140 Coffee 30 

Oatmeal, Scotch 140 

The average rise of these items is clearly greater than with 
the principal foodstuffs.'- Excluding coffee, for which the ad- 
vance has been exceptionally small, the average increase is 
between 140 and 150 per cent, as compared with 105 per cent, 
shown as the average for the principal articles of food. 

Clothing 

With regard to clothing, the statistical data available are not 
so extensive as those drawn upon for food prices, but the fol- 
lowing table, made up from selected cases and supplied to the 
committee by the Department of Labour Statistics of the 
Board of Trade may be taken as broadly representative of 
the upward movement in the prices of standard articles of 
clothing and boots: 

^Labour Gazette, December, 1917, p. 438. 



34 PRICES AND PRICE CONTROL DURING THE WAR 

AVERAGE PERCENTAGE INCREASE IN THE PRICES OF THE 
UNDERMENTIONED CLOTHING MATERIALS, ARTICLES OF 
CLOTHING AND BOOTS, BETWEEN JULY, 1914, AND SEPTEMBER, 
19161 

Article or Material September i, 19 16 

Woolen material for garments 75% 

Woolen underclothing and hosiery 90% 

Men's suits and overcoats 40% 

Cotton material for garments 50% 

Cotton underclothing and hosiery 50% 

Boots and shoes: 

Men's heavy 75% 

Men's light 60% 

Women's 60% 

Children's 70% 

Coal 
Retail prices of coal vary greatly as between coal producing 
areas and other parts of the country. Thus, while in Lan- 
cashire and Yorkshire increases of 3s. to 5s. per ton are noted 
as between July, 1914, and September, 1916, in the south of 
England and in Ireland prices have risen as much as 14s. and 
15s. per ton. The following table gives the course of retail 
prices in 1915-16, the average price in July, 1914, being 25s. 
4d. for London and 22s. 5d. for the 30 provincial towns in- 
cluded in the table i^ 

Average Price per Ton at Average Percentage Increase ba- 
the Beginning of each tween July, 1917, to Beginning 
Date Month of each Month 

Provincial Provincial 

London Towns London Towns 

19 1 5 Per Cent Per Cent 

January 29s. 4d. 23s. 5d. 16 5 

March 34s. 4d. 26s. gd. 36 19 

May 31S. 4d. 27s. 3d. 24 22 

July 3 IS. 6d. 27s. lod. 24 24 

September 31s. 6d. 27s. iid. 24 25 

November 32s. 4d. 28s. sd. 28 27 

1916 

January 32s. 4d. 28s. iid. 28 29 

March 33s. 4d. 29s. 2d. 32 30 

May 33s. 4d. 29s. 4d. 32 31 

July 33s. 4d. 29s. 8d. 32 32 

September 33s. 4d. 29s. 9d. 32 33 

The pit head price of coal was regulated in 191 5 by the 
Price of Coal (Limitation) Act, which imposed penalties for 

^ Interim report of the committee appointed by the Board of Trade to investi- 
gate the cause for the increase of prices of commodities, Cd. 8358, 1916. 
2 Interim report of the committee on prices, Cd. 7866, pp. 6-7. 



GREAT BRITAIN 35 

asking or taking a price exceeding by more than a standard 
amount (4s. per ton) the price for coal of the same description, 
sold under similar conditions, in the period July, 1913, to 
June, 1914. 

Lowest summer prices of coal were maintained in London 
from June 16 to September 25, 1914, inclusive; the retail price 
of "best Derbyshire," a typical coal of good quality, during 
the period was 26s. per ton. The rise between September 25 
and February 17 was 9s., as compared with a rise of only 2s, 
in the winters of both 1912-13 and 1913-14. The price of 
trolley coal (coal sold in small quantities generally to working 
class consumers) rose in even greater degree.^ 

^ Interim report of the committee on prices, Cd. 7866, p. 7. 



CHAPTER III 
Causes of the Rise in Prices 

The reasons given for the rise In prices are usually prompted 
by certain aspects of the situation which are forced upon the 
attention of each Individual observer by his own personal 
experience or by the character of his special Investigations. 
Those occupied with monetary transactions view the subject 
from a different angle than those who are engaged In the pro- 
duction and distribution of commodities or those who are 
students of agricultural economics. 

Prices have been rising all over the world for over two 
decades, their upward trend having started In 1S95. This 
phenomenon attracted the attention of statesmen, economists 
and social workers and much has been written on the subject 
In an attempt to explain the causes of the rise and to suggest 
remedies. The problem has become particularly acute since 
the outbreak of the war. While prices advanced about 50 
per cent from 1895 to 1913, their advance between 191 2 and 
191 7 was over 90 per cent.'- 

Inflation 

Inflation has been one of the causes most frequently as- 
signed for the war rise In the general level of prices. Speak- 
ing before the House of Lords on November 20, 191 7, Lord 
Rhondda made the statement that "the principal factor 
In Increasing prices was the expansion of currency arising 
from Inflation of credit and the Issue of a large amount of 
paper money. "^ A couple of months earlier Mr. Runclman 
expressed the view that the main cause of the rise in prices 
was the Impossibility to finance the war without a degree 
of inflation altogether unprecedented.^ Mr. McKenna ex- 
pressed about the same time a similar view.* 

^Business Digest, 1917, p. 1491. 
^ The Economist, November 24, 191 7, p. 837. 
^Liberal Magazine, August, 1917, p. 363. 
* The Economist, July 28, 1917, p. iii. 

36 



GREAT BRITAIN 37 

These expressions of opinion are In keeping with what has 
been pointed out again and again by the Economist, the 
Statist, the Nation and other British periodicals. The chief 
cause of increased prices, writes the Nation, has been the im- 
mense borrowing of the government, borrowing which has 
not been confined to the savings of the people, but which 
stimulated the manufacture of paper credit by bankers and 
financiers. 1 

The Economist believes that as long as the government will 
continue its policy of creating fresh currency in all its forms so 
long will prices continue to rise as the result of inflation. ^ 

The greater the output and the wider the distribution of 
notes and certificates, the larger the demand for commodities 
of which the supply has been steadily declining; the result of 
it has been and necessarily so a continuous rise in prices.^ 

The currency has been inflated in two ways: (i) by increase 
of volume and (2) by rapidity of circulation, the latter having 
been brought about by a great redistribution of wealth. An 
abnormal amount of money has been thrown constantly into 
circulation among large masses of the population who spend 
it from week to week.* 

But while statesmen have been pointing to inflation as a 
cause for the rise in prices and while they have been either 
justifying or attacking the fiscal policy of the government, 
no careful investigation has been made as to the extent of the 
disproportion between the issue of currency and checks and 
the wants of the British trade. Various governmental com- 
mittees, chambers of commerce and other public bodies 
confined their inquiries to the study of price fluctuations of 
some specific commodity ; they were not concerned with index 
numbers, and, when giving reasons for the increase in the 
price of milk, of meat or of coal, they do not mention inflation, 
at all. 

1 The Nation, October 14, 1916. 

2 The Economist, June 9, 1917, p. 1061; September i, 1917, p. 316. 

'A. Hurd: "Wages, Prices and Supplies — A Vicious Circle," The Fortnightly 
Review, January, 19 18, p. 38. 

*A. Shadwell: "Food Prices and Food Supply," The Nineteenth Century and- 
After, April, 191 7, p. 741. 



38 PRICES AND PRICE CONTROL DURING THE WAR 

Statistical studies that have been made so far by British 
economists seem to deal with but one side of the question, the 
circulation media. Sir Inglis Palgrave asserts that Great 
Britain is clearly suffering from an excessive issue of paper 
and that she shows all the symptoms of the disease — inflated 
prices, speculation and a popular and fiscal demand for still 
larger issues to sustain the inflated price. However, the only 
definite data that we find in his paper are statistics showing 
the value of notes and certificates outstanding from the time 
they were first issued when the war broke out to November, 
1917. On August 26, 1914, their value was £21,535,065 as 
compared with £189,944,339 on November 7, 1917, a rise of 
880 per cent. Mr. Palgrave discusses the risks of issuing in- 
convertible money in response to the demand of the Treasury 
and not to the wants of trade, but what he says are mere 
conjectures. However valuable they may be, they do not 
give any tangible data as to the condition of the British trade 
and thus they do not permit one to form any definite opinion 
as to the exact role which inflation has played in raising 
prices.^ 

Professor Pigou's statement that perhaps four-fifths of the 
rise has been inevitable and that not more than one-fifth of 
the responsibility for it may be thrown upon Great Britain's 
monetary and banking arrangement, may be accepted for 
what it is worth. It is merely a "perhaps," prompted par- 
tially by the thought that in view of the large volume of 
(British) commodity imports as compared with commodity 
exports, the shortage of tonnage and consequent rise of freights 
must have afliected prices in Great Britain more than it has 
affected world gold prices. ^ 

One of the most painstaking inquiries into the subject of 
inflation has been made by Professor Nicholson. However, 
all of his facts and figures also bear upon the monetary side of 
the situation and do not throw any light except by inference 
on the changes in the volume of the country's business 

1 Sir R. H. Inglis Palgrave: "The Influence of the Currency Rates on Prices," 
Bankers^ Magazine, December, 1917, pp. 632-636. 

2 A. C. Pigou: "Inflation," The Economic Journal, December, 1917, p. 494. 



GREAT BRITAIN 39 

transactions. Professor Nicholson^ takes up the increase of 
different forms of currency since the beginning of the war for 
the purpose of showing to what extent the increase has 
deviated from the increase in the prewar time, or has been 
"abnormal." He begins with postal orders, a form of legal 
tender which was unrepresented before the war. Their use 
as currency has been confined to the earliest stages of the 
conflict. Section 6 of the Currency and Bank Notes Act 
(1914, 4 and 5 Geo. V, ch. 14) which made postal orders legal 
tender was revoked by proclamation dated February 3, 191 5. 
During the fortnight ending August 20, postal orders over 
13,000,000 in number, of the value of £4,600,000 were issued, 
compared with 5,000,000 in number and £2,000,000 in value 
during the corresponding fortnight in 1913. They were issued 
for the purpose of meeting immediate exigencies and by the 
end of October, 1914, the value in the hands of the public did 
not exceed the normal amount. According to Mr. Nicholson, 
postal orders may be considered as the beginning of Treasury 
notes or the germ of the inflation. ^ 

The net issues of silver coinage for the five months of the 
war in 1914 were £5,327,899. This compares with £318,000 
of the first seven months before the war, or is about seventeen 
times as great. The net increase in silver in 191 5 and in 191 6 
was in each year about eight times the average of the four 
prewar years. ^ 

Professor Nicholson found a close conformity between net 
issues of silver and money wages. He does not mean to say 
that the increase in silver of itself raised wages, but that such 
an increase rendered possible the continued rise. The con- 
nection of wages and prices in order of time varies in different 
cases. At the beginning of the war the special war demand, 
backed by government funds, raised some wages. Substitu- 
tion and sympathy raised others. With the expenditure of the 
new earnings, prices rose in response to the fresh demands. 

1 I. Shield Nicholson: "Statistical Aspects of Inflation," Journal 0} the Royal 
Statistical Society, July, 1917, pp. 467-494. 

2 Ibid., pp. 468-469. 
^ Ibid., p. 469. 



40 PRICES AND PRICE CONTROL DURING THE WAR 

Then came the demand for war bonuses to meet the increased 
cost of Hving. The special war bonus was followed by the 
general sympathetic war bonus. 

Such a rise in wages and in earnings was only possible with 
an increase of currency — silver and notes. If the restraints 
of peace time on the issues of currency had been in force, a 
monetary crisis would have put an end to the rise.^ 

The issues of bronze from August to December, 1914 
(£132,000) did not exceed the average of 1912-13. The in- 
crease in 1915 was below that of 1912-13. In 1916, however, 
bronze rapidly increased to £450,000, and for the period of 
the war to the end of March, 191 7, the net increase was 
£951,689.2 

With regard to the effect of gold on prices many general 
conclusions have been drawn, most of them tending to show 
that the purchasing power of gold has been steadily dimin- 
ishing. The world production of gold has been going on un- 
checked by the war. Since 1906 it was as follows: 

1906 £80,110,204 1912 £94,466,653' 

1907 82,258,891 1913 94,494,000 

1908 88,666,905 1914 90,208,000 

1909 91,985.496 1915 96,525,000 

1910 90,842,729 1916 94,563,000 

191 1 91,875,460 1917 88,000,000* 

Gold, writes the Economist, is about the only article which 
the belligerents do not seek to destroy, so that the war is 
reducing the quantity of commodities without reducing the 
quantity of gold in the world. ^ The unprecedented amount 
of goods destroyed daily in the war zones has changed the 
ratio of exchange value between the available supply of 
gold and commodities. "Goods are not higher, but gold is 
cheaper."^ 

Professor Nicholson gives the estimated amount of gold in 
the United Kingdom on June 30, 1914, as £161,100,000. The 

1 Nicholson: op. cit., p. 486. 

2 Ibid., pp. 468-469. 

^ The Economist, February 17, 1917, p. 292. 

* The Statist, April 13, 1918, p. 631. The figures for the years 1913-1917 are 
taken from The Statist: they difTer somewhat from those in The Economist. 
^ The Economist, February 13, 1915, p. 263. 
^ The Literary Digest, November 24, 1917. 



GREAT BRITAIN 4I 

gold coin in the country increased from £100,000,000 in 1903 
to £113,000,000 in 1910, or less than £2,000,000 per annum. 
From December 31, 1910, to June 30, 1914, the estimated 
increase was £48,100,000, or just under £14,000,000 per an- 
num. From the outbreak of the war to December 31, 1914, 
"the Bank of England received the enormous addition of 
£64,000,000 in bullion and coin, considerable amounts being 
purchased and left in South Africa, Canada and other parts 
of the Empire."^ 

In spite of this strong gold position, large quantities of 
Treasury notes have been issued since the very first months 
of the war. At the end of December, 1914, the amount 
outstanding was £38,500,000; in December, 1915, it was 
£103,100,000; in December, 1916, £150,000,000. If the 
issue of Treasury notes was concurrent with the calling in of 
gold, it would not have caused any inflation of the currency, 
but, as a matter of fact. Treasury notes were issued before 
there was any limitation of the gold in circulation. Gold was 
not (to any appreciable extent) either hoarded or made into 
ornaments. The effect of the notes was then exactly the same 
as if new amounts of gold were added. The net amount of 
gold issued the year before the war was £15,000,000, which 
was a good deal above the average. But in the first five 
months of the war (to December, 1914) £38,500,000 of notes 
were issued; deducting gold for redemption (£18,500,000), it 
represents a net addition of £20,000,000 in five months. The 
rate of increase of the notes, £55,000,000 per annum during 
1 91 5 and 191 6, was nearly six times as large as the annual 
issue of gold from 1908 to 19 14.2 

Lastly, one must consider the use of checks and the amount 
of bank deposits against which the checks are drawn. The 
growth of deposits may be obtained from the Economist 
banking numbers. In 1913 the aggregate was £1,104,000,000; 
it increased to £1,290,000,000 in 1914, i.e., by £186,000,000. 
Before the war the increase in deposits for the last ten years 

^ Nicholson: op. cit., p. 471. 
^ Ibid., pp. 471-472. 



42 PRICES AND PRICE CONTROL DURING THE WAR 

had been on the average £30,000,000 a year. In 191 5 the 
increase was £123,000,000; in 1916, £210,000,000. In 
recent years checks became very popular in England and 
they have supplanted currency to a very considerable extent. 
In 1 91 3, the aggregate London Bankers' Clearing House 
returns were £16,400,000,000, these returns by no means 
including all the checks in the kingdom. There was a con- 
siderable decrease in town clearings from the beginning of 
the war until 1917. From August, 1914, to December, 1914, 
as compared with the same period in 1913, the decrease was 
33.8 per cent. The decrease in 1915 as compared with 1913 
was 22 per cent and in 191 6 it was about 7 per cent. This 
decrease was due largely to restrictions on financial dealings. 
In 1917 the total town clearing rose to £16,877,000,000, thus 
exceeding by £3,474,000,000 the clearing in 1916 and by 
£477,000,000 that in 1913.^ 

A study of country clearings which represent commercial 
checks as distinct from checks purely financial in character 
shows an Increase about fivefold over the prewar rate of in- 
crease. The total country clearings fori9i5 were £1,567,000,- 
000, compared with £1,389,000,000 for 1913, an increase of 
£178,000,000, or 13 per cent. The increase in 1916 was 
£483,000,000 over 1913, or 35 per cent.- In 1917 the country 
clearing was £2,244,000,000, an increase of £372,000,000 over 
1916, or 19.85 per cent.^ 

In connection with these data. Professor Nicholson makes 
an attempt to determine the volume of British trade. He 
assumes that with the same level of prices the increase in the 
country clearings may be said to measure roughly the increase 
in the volume of trade. The Statist index numbers show a 
rise in prices from 85 In 191 3 to 136 in 1916, an increase of 60 
per cent. If the volume of trade had remained the same, the 
country clearing returns would have shown an increase from 
£1,389,000,000 in 1913 to £2,222,000,000 in 1916 (60 per 
cent), instead of an increase to £1,872,000,000, or 35 percent 

1 The Economist, May 18, 1918, p. 781. 

2 Nicholson: op. cit., p. 471. 

3 The Economist, May 18, 1918, p. 781. 



GREAT BRITAIN 43 

only. According to Mr. Kitchin, the volume of British trade, 
taking Statist figures as a basis and with 1913 = 100, was as 
follows: for 1914 — 86^, 1915 — 86^, 1916 — 81. 

Before discussing the connection between the abnormal 
increase of currency and the abnormal rise in prices. Professor 
Nicholson is careful to repudiate the acceptance of the quan- 
tity theory in the simplest form, even after allowing for the 
rapidity of circulation. He suggests that an alternative expla- 
nation of the relation between the two increases is that the rise 
in prices was due in the first place to obstruction of supply and 
intensification of demand, and that with rising prices more 
currency has been called for to do the monetary work. Prices 
may rise first of all through speculation, and it is only when 
the inflated prices have to be translated into money wages 
and other incomes that the real demand for more currency 
arises.^ The proper test to apply in any particular case in 
considering the relations between the two increases is the 
order of time. As Treasury notes have taken the place of 
gold in Great Britain, they may be said to form the most 
important part of the legal tender currency. 

In trying to ascertain the relation between the issue of 
Treasury notes and the rise in prices, Mr. Nicholson took 
quarterly periods and compared the two sets of increases. He 
found that if one compares the same periods quarter by 
quarter there does not seem to be any connection. If, how- 
ever, the comparison is made of the note increases in one 
quarter with the index number increases in the following 
quarter there is a remarkable correspondence. For exam- 
ple, the large note increase in the December quarter, 1914, 
is followed by a large index number increase in the next 
quarter — March, 1915. The slight increases of notes in the 
next two quarters are followed by slight increases only in 
index numbers. The very large increase in notes in the 
September and December quarters of 191 5 is followed by a 
large increase in the next two quarters in index numbers. 
For the remainder of the war period up to July, 191 7, the 

1 The Economist, May 18, 1918, p. 480. 



44 PRICES AND PRICE CONTROL DURING THE WAR 

correspondence in quarters was not so striking, but the gen- 
eral trends of expansion have been the same.^ 

According to Mr. Nicholson, in order of time, the abnormal 
increase of currency preceded the abnormal rise in prices and 
in wages, and if the inflation of the currency continues the 
rise of prices will also continue. In contrast to Professor 
Nicholson's views are the conclusions to which a Select Com- 
mittee of the British House of Commons arrived in its search 
of what caused the rise in prices. While the committee of 
investigation admits that the extension of bank credits due 
to the war had had its effect, it calls attention to the fact that 
the stock of gold in Great Britain had decreased, instead of 
increased. As to the relation between the advance in prices 
and the volume of outstanding currency, the committee states 
that " the issue of paper currency . . . plays a very sub- 
ordinate part. The large increase in the amount of currency 
(by about 50 per cent) is, in the opinion of the committee, the 
result of the growth of transactions and of prices, and not the 
cause of them." The chief causes of the rise in prices are 
thus stated by the committee: "the falling short in the sup- 
ply of goods as compared with demand; the expenditure of 
payments, made by the government for commodities and 
services, in buying goods for private consumption. "^ 

Of interest in connection with this discussion may be some 
data showing the extent of the world "inflation." The amount 
of money, gold, silver and uncovered paper in circulation in 
forty principal countries of the world increased from $9,830,- 
000,000 in 1895 to $24,660,000,000 in 1917, an increase of 
150 per cent, while population increased 13 per cent. The 
amount of "uncovered" money increased since 1913 in coun- 
tries at war 400 per cent. Equally large has been the increase 
in "promises to pay." The total national debts of the world 
in 1895 were $28,750,000,000, in 1913, $43,840,000,000; by 
July, 1917, they rose to $160, 000, 000, 000. ^ 

1 The Economist, May 18, 1918, pp. 481-482. 
^ Bankers' Magazine, July, 1918, p. 7. 
^ Business Digest, 1917, p. 1491. 



great britain 45 

Increased Consumption 

Increased consumption has been held responsible for quite a 
substantial rise in prices before the outbreak of war. A 
greater equalization of wealth raised "tremendously" the 
purchasing power of the people.' The war brought with it an 
insistent and inelastic demand on the part of the government 
for all kinds of commodities needed to feed, clothe, equip, 
house and transport the army. Money paid by the govern- 
ment filters through to the people engaged in production and 
thus creates an additional effective demand, higher wages are 
being paid, war bonuses are being given, family incomes be- 
come larger because of remunerative employment of women 
and children. 

"A soldier, whether at the front or not eats about half as 
much again as in private life," said Mr. Pretyman in a de- 
bate on prices in the House of Commons. "Millions of men 
are now serving . . . and the consumption of food among 
them is anything from half as much again to twice as much as 
in normal civilian life."^ The report of the committee ap- 
pointed by the United Kingdom to study food prices gives 
as one of the causes of the rise an "abnormal consumption 
of food, fodder and clothes by armies in the field. "^ 

This abnormal consumption has been partially due to a 
certain amount of loss through waste, an unavoidable accom- 
paniment of provisioning soldiers on the firing line, and par- 
tially to healthy appetites of those who spend their time in 
strenuous exercising in the open air. The wear and tear on 
clothing, shoes, etc., is obviously also very great and these 
articles need continuous replenishing. 

At the same time large sections of the working population 
became buyers of more and better food than formerly. Ac- 
cording to Mr. Runciman "the general testimony in favor 
of this judgment is overwhelming."^ The workers have been 

^ W. A. Kiddy: "Inflation," Journal of the Institute of Actuaries, October, 1917, 
p. 287. 

2 The Economist, August 26, 1916, p. 355. 

' Chicago Commerce, August 30, 1917, p. 14. 

* Mr. Runciman's speech in the House of Commons, quoted from The Nation, 
October 21, 1916. 



46 PRICES AND PRICE CONTROL DURING THE WAR 

Spending money "on the liberal scale to which they have 
become accustomed in the early and seemingly prosperous 
months of the war, automatically raising the prices against 
themselves."^ 

The statement with regard to greater consumption on the 
part of the civilian population hardly holds true in the case of 
meat. Before the war 40 per cent of the nation's consumption 
of beef and mutton was supplied by imports; this dropped to 
only 20 per cent in 191 5. The main reasons for the decline 
were the abnormal demand for frozen meat for the armies of 
the Allies and the increased dependence of France on foreign 
imports. 2 These causes continued to operate through the 
subsequent years of the war. 

As a result, on the one hand, of the reduction of the im- 
ported supplies and attendant high prices and, on the other 
hand, of the appeals made by the government to the citizens 
in general to curtail their use of meat, the civilian consump- 
tion of beef and mutton, according to the Board of Trade 
estimates, has latterly (in 1916) been reduced by about one- 
sixth. ^ 

There is a discrepancy between this finding of the Board 
of Trade and the contention that one of the main causes of 
the rise in the price of meat has been the increased demand of 
the masses of people, owing to the better wages they were 
earning. According to the Spectator, the Board of Trade has 
had reports from all the principal industrial centers, showing 
how the working classes are buying meat much more freely 
than before, and do not hesitate to pay the best prices for 
the best joints.^ In order to reconcile the two statements, 
one must assume that the curtailment of consumption has 
been exercised by other classes of population than the indus- 
trial workmen. 

The price of milk has been forced upwards, according to the 

1 Hurd: op. cit., p. 43. 

2 Report (interim) of the Board of Trade committee on prices, Cd. 8358, p. 8. 

3 Ibid., p. 8. 

* W. F. Ford: "Currency Inflation and the Cost of Living," Fortnightly Review, 
January, 1918, p. 83. 



GREAT BRITAIN 47 

Board of Trade Committee on Prices, by "the increased de- 
mand of the producers of margarine, tinned milk and milk 
chocolate, together with that of the hospitals."^ 

The view that national consuming capacity has on the 
whole increased is combated by Mr. Ford, who contends that 
against any possible increase caused by the average soldier 
consuming more now than he did when he was a civilian must 
be set a decrease of national consuming capacity as a result 
of the impoverishment of numerous people who have had to 
suffer privations because their incomes have been stationary 
or diminished while prices have gone up.^ Whether one 
agrees or disagrees with this view, one must admit that the 
only right way of determining to what extent, if any, national 
consumption has increased is to make comparisons between 
the prewar and the war period and to make these comparisons 
on the basis of quantities, not prices. The necessary figures 
to enable one to do this are not available. 

Reckless Buying 

The forces must be liberally supplied with food, clothing, 
munitions. The government enters the market as a heavy 
buyer with "unlimited" means and in a hurry, cost being no 
object.^ Military purchases have not been of the most 
economical type. "There has been too much of the amateur 
in the market, who generally pays very dear for his opera- 
tions. "^ 

Higher Cost of Production 

The average cost of producing and of marketing commodi- 
ties has risen since the beginning of the war because in order 
to satisfy a rapidly increasing demand it became necessary 
to resort to less efficient factors of production. Many skilled 
workmen were withdrawn from peace time industries for war 
activities; and a great deal of unskilled labor was injected into 

^ The Spectator, vol. 117, 1916, p. 456. 

^ Report (interim) of the Board of Trade Committee on Prices. Cd.8358. 1916, 
p. 12. 

^Shadwell: op. cit., pp. 739-740. 
^ Kiddy: op. cit., p. 278. 



48 PRICES AND PRICE CONTROL DURING THE WAR 

mines, mills and factories for the purpose of maintaining and 
raising the output. Under present temporary and abnormal 
conditions every source of supply must be brought into use 
and put into operation "upon a basis of cost which would have 
been prohibitory at any other time within the last thirty 
years. "^ 

In considering the causes of the advance In retail prices of 
meat, which on September i, 1916, averaged about 5|d. per 
pound above those of July, 19 14, the Board of Trade Commit- 
tee on Prices reported that "to a certain extent this increase 
can be at once accounted for in terms of cost of production, 
which has steadily risen. "- 

"The government at an early stage of the war put restric- 
tions on the export of feeding stuffs, includirig oil cakes, maize, 
barley and oats, and also on fertilizers. . . . Neverthe- 
less the prices of feeding stuffs and fertilizers have risen 
greatly." 

Average Price per Ton Average Price per Ton 

before the War in July, 1916 

£ s. d. £ s. d. 
Feeding stuffs: 

Linseed Cake 8 5 lo 12 15 9 

Cotton Seed Cake 516 3 9 15 9 

Soya Bean Cake 613 8 12 26 

Maize Meal 7 10 o 11 8 o 

Fertilizers: 

Nitrate of Soda (best) 10 14 9 18 50 

Basic Slag (prime quality ff p. c. 

phosphorus) i 16 7 3 06 

Sulphate of Ammonia 13 11 8 17 12 i 

Decline in the Supply of Commodities 

The decline in the supply of many commodities has been 
due to the diversion of men to the armies and to the pro- 
duction of goods for the operation of war.^ While some main- 
tain that because of the worldwide diversion of labor there 
has been a worldwide curtailment in the production of foods, 

^ Marsh: "Economic Difficulties in the Way of Successful Price Fixing," The 
Economic World, July 21, 191 7, p. 79. 
_ ^ Report (interim) of the committee appointed by the Board of Trade to inves- 
tigate the principal causes which led to the increase of prices of commodities 
since the beginning of the war, Cd. 8358, 1916, p. 7. 

^Labour Gazette (Canadian), September, 1917, p. 714. 



GREAT BRITAIN 49 

raw materials and finished commodities, ^ others blame the 
reduction in British sea carrying capacity for the shortage. 
"The nation has apparently not yet realized," writes Mr. 
Hurd, "that there is plenty of food to be had over the seas 
and that there are ample supplies of raw material for industry 
available if we possessed the necessary tonnage. . . . 
The unrivalled resources of this country for making good 
the losses to shipping are not being utilized to the fullest 
extent. "2 

The diversion of men from productive work to other pur- 
suits has led to greater use of machinery, to working overtime 
and to enlisting more female labor into mills and factories, 
as well as into agricultural activities, but all this only miti- 
gated the effect of diversion without entirely offsetting it. 

The decline in supplies is also the result of the destruction 
of property on land by the passage of armies and, what is of 
greater immediate significance to Great Britain, through the 
sinking of ships, many of which were carrying towards the 
Isles thousands of tons of food and raw material. 

The decline in the available tonnage resulted in the narrow- 
ing of the markets ; many sources of supply have been grad- 
ually eliminated because of distance, as ships can not be 
spared for long routes on account of the length of time 
consumed in going and in coming. 

The South Wales panel of the Commission of Inquiry into 
Industrial Unrest in Great Britain^ was "inclined provisionally 
to adopt the view that the major part of the increased cost of 
food is due in part directly and in part indirectly to the 
destruction of tonnage by enemy submarines."'* 

Milk prices rose because the rapidly rising meat prices of 
191 5, accompanied as they were by a shortage of labor, led 

^G. M. Reynolds: "Steady Business to Meet War's Shock," The Nation's 
Business, October, 19 17, p. 53. See also the Report of the Committee of the 
General Federation of Trade Unions of the United Kingdom: "Some 50,000,000 
of the world workers . . . (are now) engaged in war and in the production of 
munitions of war." Quoted from the Chicago Commerce, August 30, 1917. P- ^4- 

2 Hurd: op. cit., pp. 50-52. 

^ Infra, p. 100. 

* Industrial Unrest in Great Britain, Bulletin of the U. S. Bureau of Labor 
Statistics, No. 237, p. 180. 



50 PRICES AND PRICE CONTROL DURING THE WAR 

to some slaughtering of milk cows.^ It was necessary by 
orders dated June 22 and August 18, 1915 (the latter of which 
was amended on March 31, 191 6) to put a restraint upon the 
slaughtering of cows obviously in calf. At the same time a 
limit was put upon the slaughter of calves under six months 
old. Not a few farmers were anxious to abandon the dairying 
business because of the long hours of labor involved in it and 
because of strict legal requirements as to sanitation and 
quality of milk. 

The bearing of shortage upon prices may be seen in compar- 
ing grain conditions of 191 5 and early 1916 with conditions 
towards the end of 1916 and through 19 17. It was the record 
crops of 191 5 which made the problem of supply easy to solve. 
In 1916 there were short crops all over the world. Shortages 
developed not only in grain but also in potatoes, the result 
being a rapid rise in prices. ^ 

In 1916-17 there were harvested in Argentina, Australia 
and New Zealand about 61,581,000 quintals, as compared 
with 97,864,000 in 1915-16, and 67,080,000, the average for 
the five years, 1909-19 13, the decline being due to an excep- 
tionally small crop in Argentina.^ 

One of the contributory causes for the rise in meat prices 
was the severe drought of 191 5 in Australia, which destroyed 
a large quantity of stock and greatly curtailed Australian 
supplies.'' The reduction in the number of live stock in differ- 
ent parts of the world manifested itself again in 191 6 because 
of the demands of the war, shortage of feed and the drought 
of the summer.^ 

The sharply and rapidly rising prices made the statistics of 
the values of British imports and exports of no assistance for 
the purpose of obtaining data as to the amount of commodi- 
ties imported and exported since the beginning of the war. 

^ Report (interim) of the Board of Trade Committee on Prices, Cd. 8358, 1916, 
p. II. 

''■Labour Gazette (Canadian), May, 1917, p. 392. 

^ Bulletin pf Agricultural Statistics, published by the International Institute of 
Agriculture in Rome; quoted from The Economist, March 31, 1917, p. 584. 

* Report (interim) of the Board of Trade committee on prices, Cd. 8358, 1916, 
p. 9. 

^Labour Gazette (Canadian), May, 1917, p. 392. 



GREAT BRITAIN 5 1 

Some light may be thrown on this question by comparing 
the yearly returns of foreign trade shipping of the country.' 

1916 1915 1914 

Entered (with Cargoes) 

British 20,217,334 22,861,738 28,928,883 

Foreign 9,842,094 10,862,166 14,131,890 



Total 30,059,428 33-723-904 43,060,783 

Cleared (with Cargoes) 

British 17-751-953 20,380,530 32,515,814 

Foreign 17,844,807 19,148,832 23,452,755 

Total , 35.596,754 39-529,362 55-968,569 

The above figures show that the entry of ships with cargoes 
decreased from i9i4to 1916 by 13,001,355 tons, and the clear- 
ance by 20,371,815 tons. 

During the same period the change in the value of imports 
and exports was as follows i^ 

IMPORTS AND EXPORTS 

Merchandise 
Imports Exports Exports 

c. i. f. (British) (Foreign and Exports 

Values f. o. b. Values Colonial) (Total) 

f. o. b. Values 
£ £ £ £ 

1916 949,152,679 506,546,212 97,608,502 604,154,714 

1915 851,893,350 384,868,448 99,062,181 483,930,629 

1914 696,635,113 430,721,357 95,474,166 526,195,523 

The value of imports increased from 1914 to 1916 by £252,- 
517,506, and the value of exports by £77,959,191. The ac- 
counts of goods imported do not include certain goods which 
at the time of importation were the property of the British 
Government or the governments of the Allies. The accounts 
of goods exported include goods bought in the United King- 
dom by or on behalf of the governments of the Allies, but do 
not include goods taken from British government stores and 
depots or goods bought by the British Government and 
shipped on government vessels. Unofficial estimates placed 
the value of the excluded imports at from £120,000,000 to 
£150,000,000 in 1915.^ 

1 Trade and Navigation Accounts, House of Commons Sessional Papers, Decem- 
ber, 1916, vol. 31, p. r. 
'^ Ibid., p. I. 
3 "Trade in War Time," The Political Quarterly, March, 1916, p. loi. 



52 PRICES AND PRICE CONTROL DURING THE WAR 

The Imports, exports and reexports In 1917 were £1,065,- 
256,407, £525,308,991 and £69,552 respectively. 1 These fig- 
ures profess to Include for the last six months of the year (July 
to December) certain government imports not Included In the 
figures of the previous years, namely, articles Imported and 
exported In public as well as private ownership "so far as 
particulars are available at the time of compilation." 

As the Economist remarks, no one can tell the degree of 
omission concealed behind this cryptic reservation. Exports 
for the use of British forces In any theatre of the war are still 
excluded. Presumably also supplies shipped straight to the 
British armies In France and elsewhere do not appear In the 
published Import figures.^ Imports of food have always been 
included In the returns. The figures of the Economist for 
1 91 6 differ somewhat from those given In the preceding table. 
Taking these figures (£948,506,492), the rise in the value of 
imports In 1917 over 1916 was £116,749,915. In order to 
arrive at the quantity of goods Imported and exported, the 
Economist until last year had the practice of recalculating 
the Individual items of trade returns at prices of the preced- 
ing year, and also at prices of 191 3 (the prewar year). 

The table opposite gives the recalculated figures of the 
returns for 1916 at 1913 and 191 5 prices, as well as the value 
of trade during these three years according to the existent 
prices. 

The calculation at 191 3 prices shows that while the re- 
corded value of Imports rose between 1913 and 1916 by 
£180,500,000, the quantity of goods Imported In reality de- 
clined by £112,800,000 (14^ per cent), higher prices making 
it appear as If the volume of Imports rose by £293,300,000 (27I 
per cent.)^ The total turnover of trade, which was higher by 
£149,800,000, according to the published figures, really de- 
clined by £284,200,000 (20 per cent), but higher prices caused 
an increase of 434,000,000 (31 per cent) In the recorded value. 
An analysis of the individual groups of imports for 1916 as 

^ The Economist, January 19, 1918, p. 76. 

2 Ibid. 

^ Ibid., January 27, 1917, pp. 130-131. 



GREAT BRITAIN 53 

Value of Value of 

1916 1916 

Value Trade at Value Trade at Value 

Recorded 19 13 Recorded 19 15 Recorded 

in 1916 Prices in 1913 Prices in 1915 

Imports: £ £ £ £ £ 

Food and drink 419-5 276.9 290.2 353-5 380.9 

Raw materials 337-0 249.7 281.8 235.4 286.6 

Manufactures 189.3 127. i 193.6 150.8 181. 4 

Total imports (incl. 

mis.) 949.2 655.9 768.7 743.1 851.9 

British exports: 

Food and drink 29.5 20.6 32.6 24.5 25.1 

Raw materials 64.3 38.3 69.9 46.3 52.4 

Manufactures 393-7 306.7 411.4 329.9 292.9 

Total British exports 

(incl. mis.) 506.5 379.9 525.2 419.7 384.9 

Reexports : 

Food and drink 21. i 17.3 15.9 18.8 22.4 

Raw materials 49-1 44-2 64.0 38.1 54-6 

Manufactures 27.3 22.0 29.5 24.8 22.0 

Total reexports (incl. 

mis.) 97.6 83.5 109.6 81.7 99.1 

Total turnover 1,553-3 i-ii9-3 ^i,403-5 i, 244-5 ''1,335-9 

* The Economist, January 27, 191 7, p. 130. 
^ Ibid., January 20, 1917, p. 81. 

compared with 191 3 shows that had prices remained at the 
1 91 3 level the value of foodstuffs imported would have de- 
clined by £13,300,000 (4I per cent), but the higher prices 
were responsible for a recorded increase of £129,300,000, 
The value of imported raw materials would have declined by 
£32,100,000 (about 11^ per cent), but a rise in prices made the 
value appear £55,200,000 higher. Of manufactures, the value 
would have been reduced by £66,500,000 (34 per cent), the 
increase in prices resulting in a recorded decline of only 
£4,300,000. 

The calculation at 191 5 prices shows that there was ac- 
tually a decline of £91,400,000 in the value of trade in 191 6, 
as compared with 191 5, while the published figures recorded 
an increase in the total movement of goods. The rise in prices 
is responsible for an increase of £308,800,000, The volume 
of trade declined by over 6 per cent, but the average prices 
increased by 24.8 per cent. An analysis of the individual groups 



54 PRICES AND PRICE CONTROL DURING THE WAR 

of imports for 1916 as compared with 191 5 shows that the 
quantity of foodstuffs imported decHned to the extent of £27,- 
400,000 (7 per cent), but the average prices were 17^ per cent 
higher, resulting in a recorded increase of £38,600,000. In 
the case of raw materials, the decline was equal to £51,200,000 
(18 per cent). The prices, however, went up by 35.5 per cent, 
accounting for an increase of £101,600,000 in value. The 
imports of manufactures declined by £30,700,000 (17 per 
cent), but a rise of 21 per cent in prices made the value appear 
£38,500,000 higher.^ 

One must keep in mind also that imports are given at c. i. f. 
(cost, insurance and freight) prices and that an increase in 
freight and insurance rates besides the rise in average prices 
accounts for the great increase in the value of imports. 

Particulars of quantities for food, drink, tobacco are no 
longer obtained in the returns so as to keep the enemy in 
ignorance of the actual tonnage of goods received. Statistics 
are available for other imports and examples of higher value 
and smaller quantities are furnished by raw cotton, of which 
16,213,713 centals of 100 pounds were purchased in 1917 
for £110,590,634, as compared with a purchase of 21,710,022 
centals for £84,729,677 in 1916, and of 26,476,161 centals for 
£64,671,623 in 1915. 

Mr. Paish stated in May, 1916, that as far as available 
data permitted an opinion to be formed, the small decline 
in production in Great Britain in 1915 was offset by in- 
creased imports from abroad, due mainly to government 
purchases, and by reduced exports, so that the country's 
consumption in 191 5 was much greater than it was in 19 13, 
the last complete year of peace. ^ This conclusion differs 
from the conclusions of the Political Quarterly, which wrote 
in its March, 1916, issue that "the first and the most 
striking feature of trade returns is the enormous increase 
in the price paid for food supplies." According to this 
magazine, "the United Kingdom paid in 1915 an increased 

1 The Economist, January 20, 1917, p. 81. 

^ George Paish: "War, Finance," Journal of the Royal Statistical Society, May, 
1916, p. 276. 



GREAT BRITAIN 55 

price of over ninety millions for if anything a less amount 
of food than was imported in 1913."' In the latter part of 
1 91 6 the Nation quoted Mr. George Lambert, who pointed 
out that some actual shrinkage in home production was 
taking place. According to the Nation, against this reduc- 
tion in the home supply must be set the unknown quantity 
of imports, which, being bought abroad and brought over by 
the government for the use of troops, do not figure in the 
statistics of imported food. "If half our troops," writes 
the Nation, "are supplied in this way, this means that some 
two and a half million men must be deducted from the 
population which our ordinary imported and home grown 
supplies have to provide for. Thus it appears quite intelli- 
gible that there may be no real shortage of supplies of bread 
and meat for our population, in spite of the strain upon 
transport and the apparent reduction in the number of retail 
butchers' shops. "^ The Nation's reference to government 
importations is palpably wrong, as the accounts of importa- 
tions, while excluding until July i, 1917, certain goods which 
at the time of importation were the property of the British 
Government or the governments of the Allies, never excluded 
food imports. Mr. Lambert's statement that there has been 
a shrinkage in home production since the beginning of the 
war was, at the time when he wrote, supported to a certain 
extent by facts. 

There was no real shortage of food during the first two 
years of war, if one accepts the report of a committee of the 
Royal Society which, at the request of the President of the 
Board of Trade, made a searching investigation of the food 
supply in the United Kingdom. However scientific may be 
conclusions based on grammes of protein and of carbohy- 
drates or on calories of energy value, they do not give an exact 
view of the food situation, as they do not show the availability 
of the most desirable or most sought for articles of diet. 
People do not go into grocery stores for grammes of carbo- 
hydrates, protein or fat; they ask for eggs, cheese or butter 

^Political Quarterly, March, 1916, p. 103. 
2 The Nation, October 21, 19 16, p. 102. 



56 PRICES AND PRICE CONTROL DURING THE WAR 

and if the supply of these articles is not sufficient to meet the 
demand, their price will go up, even though there may be 
plenty of sago or fish on the market. This has been particu- 
larly true of Great Britain. The Englishman has been de- 
scribed as very exacting in his demands, not content with 
a sufficient supply: "it must be of the kind that suits him. 
. He is a creature of habit and grumbles extremely 
if he is forced against his will to change it, even to the extent 
of drinking another kind of tea."^ Having been able to draw 
upon the whole world for necessaries and luxuries of life, he 
became probably the most pampered person in the world in 
his choice of food. 

A change of diet is not accomplished overnight; it takes 
time to learn the usage and value of substitutes, and while 
under a supreme test people will eat horses, dogs and cats, 
as the Parisians did during the siege of Paris, in 1870-71, 
they will not give up their customary food even for more 
nutritious, and what some may consider more palatable, stuff 
until they actually feel the imperative need for such action. 

The Royal Society Committee's report shows what was 
the country's position with regard to food in July, 1916, as 
compared with the prewar situation. The report states that 
the problem is partly statistical, partly physiological, involv- 
ing (i) a knowledge of quantities of foods available and (2) the 
determination of the adequacy of the supply for the suste- 
nance of the nation, the latter calculated in the amounts of 
protein, fat and carbohydrates contained in the given foods. 

Taking the average for five years preceding the war (1909- 
191 3), the quantities (in metric tons) of food materials im- 
ported (net) and home produced were as follows: 

Cereals 4,865,000 

Meat 2,685,000 

Poultry, eggs, game, rabbits 331,000 

Fish 848,400 

Dairy products, lard and margarin 5,231,800 

Fruit 1,271 ,000 

Vegetables 5,482,000 

Sugar, cocoa and chocolate ^1,657,000 

^ The Food Supply of the United Kingdom. A report drawn by a committee of 
the Royal Society at the request of the President of the Board of Trade, Cd. 8421. 

1 R. H. Rew: Food Supplies in War Time, Oxford Pamphlets, 1914, p. 5. 



GREAT BRITAIN 57 

Generally speaking, a woman or a child requires less food 
than a man, i.e., has a man value less than a unit. According 
to the report, the conversion of a population of men, women 
and children into units or "men" reduces the total number 
by 23 per cent. In assuming that lOO "men, women and 
children" as consumers equal 77 units or "men," the quanti- 
ties of food available in Great Britain during 1909-1913 were 
per " man " (estimating the population of the country as having 
been 45,200,000) : 



Protein 


Fat 


Carbohydrates 


Energy Value 


grammes 


Grammes 


Grammes 


Millions of Calories 


113 


130 


571 


4009 



The above figures compare very favorably with what is ac- 
tually needed for proper nutrition. The normal requirements 
per head per day involve the use of : 



Protein 


Fat 


Carbohydrates 


Energy Value 


Grammes 


Grammes 


Grammes 


Millions of Calories 


87 


100 


440 


3091 



In July, 1916, the total population of Great Britain was 
estimated at 46,500,000, including fighting forces at home 
and abroad, prisoners, etc. The available food in time of 
war must be distributed into two shares: (i) for military and 
naval establishments (4,000,000 men) and (2) for civilian popu- 
lation (31,800,000 men). Such a distribution of food on the 
basis of supply equal to that of 1909-1913, as illustrated 
in the following table, shows that on the prewar basis of supply 
the food available for the civilian population would have been 
more than sufficient as regards the supply both of protein and 
of energy. 

Protein Fat Carbohy- Energy Value 

Grammes Grammes drates Millions of 

Grammes Calories 

Military 140 180 500 4300 

Civil 106 120 563 3859 

According to the findings of the committee, the supply of food 
available up to July 29, 1916, provided a margin of about five 
per cent above the minimum necessary for proper nutrition. 
The committee adds to its findings the very pertinent remark 



58 PRICES AND PRICE CONTROL DURING THE WAR 

that "while the supply of food has been adequate for the 

support of the population, the rise in prices has accentuated 

the inequalities of distribution, which reduce the daily ration 

of many below the level of efhciency." 

During the period considered by the committee oversea 

supplies of the principal foodstuffs had been on the whole 

well maintained:^ 

1914-15 1915-16 

Cwts. Cwts. 

Wheat and flower 111,500,000 111,800,000 

Rice 10,100,000 8,300,000 

Sugar 35,800,000 32,000,000 

Beef 8,000,000 7,300,000 

Mutton 4,600,000 3,500,000 

Bacon 6,400,000 6,900,000 

Hams 1,300,000 1,400,000 

Butter 3,700,000 2,800,000 

Margarin 1,700,000 2,600,000 

Cheese 2,800,000 2,500,000 

In the five years before the war, the United Kingdom im- 
ported 64 per cent of foodstuffs consumed there, producing 
only 36 per cent at home.^ 

One factor is often overlooked, and this is the effect of the 
war on the number of consumers. The population of Great 
Britain, instead of growing as it did before the war, became 
stationary, i.e., the war losses have been balanced by the gain 
in births.^ 

High Freight and Insurance Rates 

It is natural that in a country which like Great Britain 
depends for a large part of necessary foodstuffs and raw 
materials upon foreign markets, availability of tonnage, freight 
rates and costs of marine insurance should be considered as 
important factors in determining the price of commodities. 
When, after the declaration of war, prices began to rise, 
many people attributed the increase to disorganization of 
ocean transportation and to exceedingly high freight charges. 

1 H. S.: "Early Phases of Food Control," The Edinburgh Review, January, 
1918, p. 114. 

2 John Hilton: "The Foundation of Food Policy," The Edinburgh Review, July, 
19J8, p. 29. 

^ R. Henry Rew: "The Prospects of the World's Food Supplies after the War," 
Journal of the Royal Statistical Society, January, 1918, p. 55. 



GREAT BRITAIN 59 

Some Idea as to how war conditions affected freight rates 
may be formed from the investigation of the Departmental 
Committee on Prices. It found a wide difference in tariffs on 
wheat and flour in the period January to March, 1914, as 
compared with the period July to September, 191 6. The 
freight rate on grain from New York was 13. 2d. (28.4 cents) 
per quarter {28 pounds) in the first period and 9s. 8d. ($2.35) 
in the second period, an increase of 729 per cent; the rate on 
grain from Argentina (down river) was 9s. lod. ($2.39) per 
ton during the first period and 140s. 6d. ($34.19) during the 
second period, an increase of 1.329 per cent.^ 

Since war commenced ocean freight rates per ton rose as 
follows:- 

Endofi9i6 Endofigis End of 1914 End of 1913 
Per ton Per ton Per ton Per ton 

River Plate to U. K HS/o 

Bombay to p. p 230/0 

United States — 

Atlantic Ports to L. H. 

(cotton) 260/0 

Atlantic Ports to U. K. 

(grain) 74/6 

Average 177/4 118/2 47/8 16/11 

Figures taken from the report of the American consul in 
Liverpool compare certain rates prevalent before the war 
with those charged in December, 191 6: Cardiff to River 
Plate, $3.73 and $13.37; River Plate to United Kingdom, 
$4.39 and $27.98; Bombay to United Kingdom, $4.60 and 
$57.17; Calcutta to United Kingdom, $5.96 and $66.89.^ 

In 1 91 7 the homeward River Plate fluctuated a little, being 
125s. from the lower ports for discharge in the United Kingdom 
when the year opened, rising later to 140s. from Buenos Aires 
or La Plata and 145s. from up-river to Great Britain. In 
1 9 14 this voyage was valued at i8s. 6d. Heavy grains from 
the Northern Range of America fixed for neutrals at 30s. 
to 40s. per qr. to the United Kingdom. 

1 Monthly Review of the Bureau of Labor Statistics, February, 191 8, p. 113. 

2 "Wholesale Prices of Commodities in 1916," Journal of the Royal Statistical 
Society, March, 191 7, p. 294. 

^ Commerce Reports, Annual Series No. 19b, November i, 1917. 



120/0 
III/3 


45/0 

22/0 


12/0 

18/0 


262/6 


90/0 


30/0 


79/0 


33/10 


7/10 



60 PRICES AND PRICE CONTROL DURING THE WAR 

Business which fixed in 1914 from Bombay on the dead 
weight basis at 19s. could only be done at 200s. at the begin- 
ning of 191 7, and later the figure rose to 300s. with 400s, 
quoted to the Mediterranean.^ 

The editor of the Journal of the Royal Statistical Society 
considers that the rise in freights was brought about mainly 
by the action of the British Government in commandeering 
and requisitioning for war purposes a considerable propor- 
tion of the British merchant marine. ^ 

To this cause, which obviously shortened the amount of 
British shipping available for mercantile purposes, may be 
added the destruction of many vessels by submarines, the 
increased cost of working ships, the congestion at the docks 
and the extra large profits made by the owners of liners and 
of tramps. 

Through 191 7 Great Britain experienced a gradually in- 
creasing state control of shipping. The extent of the govern- 
ment's requirements in tonnage was indicated by Sir L. 
Chiozza-Money (Parliamentary Secretary to the Ministry 
of Shipping) in the House of Commons on May 10, when he 
stated that of the total tonnage available 92 per cent had 
been placed at the disposal of the Food Controller, the War 
Office, the Admiralty and the Ministry of Munitions.^ 

Increased freight rates do not apply to this requisitioned 
tonnage, as it has been taken over by the government at 
prewar rates of freight, "although since the commencement 
of the war the cost of repairs has trebled, the cost of marine 
insurance, inclusive of war risks, and also the cost of stores 
and provisions, have increased in the same proportions."* 
The government paid in June, 1917, 6s. 6d. ($1.58) per ton 
per month to British shipowners under requisitioned condi- 
tions, while neutral tonnage was being chartered at 50s. 
($12,17) per ton per month. ^ 

1 Chamber of Commerce Journal Trade Review, January, 19 18, p. 3. 

2 Journal of the Royal Statistical Society, March, 1917, p. 294. 

^ Chamber of Commerce Journal Trade Review, January, 1918, p. 3. 
^ Industrial Unrest in Great Britain, Bulletin of the U. S. Bureau of Labor 
Statistics, No. 237, p. 181. 
^ Ibid., p. 181. 



GREAT BRITAIN 6 1 

It is exceedingly difficult to establish the relationship be- 
tween the rise in freight rates and the increased cost of goods. 
In a debate in the House of Commons on August 22 and 23, 
191 6, Mr. Winston Churchill attacked shipowners who, ac- 
cording to him, by extorting enormous profits, were raising 
the price of commodities; he advocated governmental control 
of the shipping industry. Mr. Houston, in reply, stated that, 
"although by arrangement with the Board of Trade and the 
shipowners of the country" the whole of the refrigerating 
tonnage employed in the carriage of meat to Great Britain 
"was fixed at a rate of freight which did not exceed the pre- 
war rates more than | of a penny to ^d. per pound, the prices 
of meat have risen enormously."' Mr. Pretyman gave fig- 
ures which showed that if at the outbreak of the war the 4 
pound loaf was 5|d. and in August, 1916, gd., the rise in 
freights represented only id. out of 3^d. advance in the price. ^ 
In October, 1916, Mr. Runciman pointed out that less than a 
half penny out of the 4d. or 5d. rise in the price of meat went 
for higher cost of carriage. ^ 

In considering the causes of increased meat prices, the 
Board of Trade committee reported that because of systematic 
shipping arrangements made by the government, freight 
rates do not constitute the main item in the increased cost of 
imported meat, the average amount, including the increase 
during the war, being not more than id. per pound. The 
report mentions limitations of means of transport as one of 
the reasons for high prices, the last named factor including the 
handling of cargoes in port and by rail and the frequent conges- 
tion in the docks, which so seriously limited the working power 
of ships and thus reduced amount available for civilian use.^ 

Most of the food is brought to Great Britain by British 
owned steamers at the requisitioned rate and the anomaly 
has been pointed out of Argentina wheat not having been 
lowered in price, though shipped to British Isles at blue book 

1 The Economist, August 26, 1916, p. 355. 

2 The Nation, October 21, 1916. 

^ Report (interim) of the Board of Trade committee on prices, Cd. 8358, 1916, 
p. 10. 



62 PRICES AND PRICE CONTROL DURING THE WAR 

rates. ^ In June, 191 7, It was authoritatively stated that 
freights accounted for only fd. (1.5 cents) in the price of a 
4 pound loaf and id. (2 cents) per pound in meat.^ 

It is obvious from the above that one must accept with a 
great deal of caution the contention of Sir George Paish that 
one-half of the rise in prices in 191 5 and 191 6 was due to rise in 
freights,^ or the statement of the editor of the Journal of the 
Royal Statistical Society that the rise of prices in 191 6 was due, 
in a large measure, to a continuous advance in freight rates. ^ 

The cost of insurance against war risk has increased con- 
siderably since Germany started her ruthless submarine cam- 
paign. Lloyds during the first part of 191 7 demanded 25 
per cent for war risk insurance on a three months voyage. 
"The effect of a 25 per cent war risk insurance on a cargo 
worth £50,000 carried in a ship worth £150,000, a total of 
£200,000 ($973,300), with superadded cost of insurance, 
£50,000 ($243,325) is to double the costs of the cargo. "^ No 
actual premiums are paid by the government for insuring its 
requisitioned shipping, but it has to see to it that its risks are 
covered and its losses recouped. In the opinion of the com- 
missioners for Wales appointed to inquire into the causes of 
industrial unrest, the cost of war risk insurance, especially 
for food supplies, ought not to be borne by the cargo, but 
should be regarded as general war expenditure and be met 
accordingly.^ 

Taxation 

Taxation played some part in the increase of prices. This 
has been particularly true in the case of indirect taxes, such 
as license and customs duties. Thus of the increase of 87 per 
cent noted on January i, 1917, above the prices of July, 1914, 
about 6 per cent was due to additional taxation on tea and 
sugar. ^ On the other hand, taxation tended to lower prices 

1 Commerce Reports, Annual Series, No. 19b, November i, 1917. 

2 Bulletin of the U. S. Bureau of Labor Statistics, No. 237, p. 181. 

' H. S. Foxwell: "Ways and Means," The Economic Journal, March, 1916, p. 18. 

* Journal of the Royal Statistical Society, March, 1917, p. 294. 

^ Bulletin of the U. S. Bureau of Labor Statistics, No. 237, p. 181. 

^ Ibid., p. 181. 

^ Commerce Reports, October 12, 191 7, p. 6. 



GREAT BRITAIN 63 

In SO far as it acted as a check on consumption. By resorting 
mostly to loans and not to taxation, the government failed to 
exercise its great weapon of finance in this direction. "By 
rationing the buying power of the citizen by drastic taxation, 
the Chancellor might have greatly reduced the need for 
control and its consequent friction. "^ 

Money taken in taxation leads to personal retrenchment. 
Money taken in loans permits the population to spend more 
nearly as usual; this spending because of simultaneous gov- 
ernmental demand and of decreasing supplies brings about a 
rise of prices. ^ 

The initial cause of the rise in prices, writes the Economist, 
was the financial policy of the government, which has relied 
too much on loans — largely credit loans — and too little on 
taxation designed to check unnecessary consumption.^ 

To be effective, taxation must be applied not only to large 
incomes. While increased money in the hands of the wealthy 
leads to a relatively larger demand for luxuries, the major 
part of their incomes is invested in "capital goods." What 
is needed, according to Professor Cannan, is a tax on all in- 
comes which give a margin over absolutely necessary expendi- 
tures ; only such a taxation will act as a factor reducing the 
price of necessaries.^ 

Hoarding by the Consumer 

A certain amount of hoarding by the consumer is men- 
tioned by some as an additional cause of high prices.^ How- 
ever great may have been the effect of this cause during the 
panic which occurred in the first two weeks of the war, and 
however spectacular may have been some cases of hoarding 
discovered by police officials, who searched the residences of 
suspects, hoarding by consumers has hardly exercised any 
appreciable influence in raising prices. 

1 The Economist, February 16, 1918, p. 256. 
^ Letter to The Economist, October 30, 1916, p. 569. 
' The Economist, September i, 1917, p. 316. 

* E. Cannan: " Industrial Unrest," The Economic Journal, December, 1917, p. 463. 
^ H. S. Foxwell: "Inflation," Journal of the Institute of Actuaries, October, 1917, 
p. 278. 



CHAPTER IV 

Profiteering 

In discussing the dangers of governmental regulation of 
food, the Spectator^ asserted that it was very doubtful 
whether there would have been any political outcry with 
regard to high prices but for the theory that the rise was 
due to the wicked machinations of the "profiteer." 

The journal attacks the halfpenny press for pandering to 
the prejudice of its readers by continually suggesting that high 
food prices are the result of combinations and speculations of 
the profiteers, the Labor members in Parliament and labor 
agitators outside of it acting in a similar spirit.^ It deplores 
the whole outcry about food prices as one of the worst examples 
of the way in which interested persons will lend themselves 
to a popular agitation without the least regard to the real facts. 

If, according to this periodical, one-tenth of the public 
money that has been devoted to the war savings campaign 
and the food economy campaign had been spent upon a cam- 
paign to teach the mass of the people the elementary laws 
governing the movement of prices, a great deal of the present 
social bitterness would have been entirely avoided.^ 

The Statist does not consider profiteering a weighty factor 
in raising prices; It Is rather a symptom of prevailing condi- 
tions. Because of shortage in the world's food supplies and 
the inflated condition of the currency, high prices are Inevi- 
table, and "when there Is a tendency for prices to rise It Is 
natural that speculators should take advantage of the tend- 
ency and force the rise higher and quicker than it otherwise 
would go."^ 

While admitting that to some extent strategies of unscrupu- 

1 The Spectator, August 4, 191 7, p. 109. 

2 Ibid., October 21, 1916, p. 465. 
^ Ibid., July 28, 1917, p. 79. 

* The Statist, February 6, 1915, p. 206. 

64 



GREAT BRITAIN 65 

lous profit seekers may have been active during the war, the 
Saturday Review considers that charges made against them are 
unaccompanied by evidence. "Federated scoundrels can 
not have ruled over all markets, yet the price of all commodi- 
ties has gone up and up."' 

Professor Cannan's opinion is similar to those mentioned 
above. He speaks of the disappointment of the working men 
who have now more money to spend and who in spending 
it raise prices against themselves. Notwithstanding higher 
wages, the working men are not as much better of¥ as they 
expected and some of them are even worse off than they were 
before ; they are naturally disappointed and complain of being 
exploited by profiteers. Newspapers see good copy. Articles 
appear explaining that the rise of prices is due solely to the 
machinations "of such or such a ring."^ 

According to Mr. Shadwell, the abnormal state of the mar- 
ket affords unusual opportunities and temptations to unscru- 
pulous persons. He favors a watchful lookout for malpractices 
which may aggravate existing conditions, but expresses the 
view that "to regard such malpractices as the main cause of 
high prices is to misconceive the whole problem."^ Accord- 
ing to him, popular discontent against high prices has been 
excited not so much by the rise itself as by the belief, assidu- 
ously inculcated, that it is caused by manipulation of the 
market and could be easily prevented by summary measures 
of control.^ 

That high profits should be regarded rather as a result than 
a cause of high prices is maintained by the Nation: "The 
increased supply of money which the government by its buy- 
ing pumps into the business system operates everywhere to 
set more purchasing power in action. . . . The higher 
prices thus generated must express themselves in higher 
profits or higher wages, or in higher prices for the tools 

1 The Saturday Review, September 2, 1916, p. 217. 

^ E. Cannan: "Report on Food Prices," The Economic Journal, December, 19 16, 
p. 474. 

^ A. Shadwell: "Food Prices and Food Supply," The Nineteenth Century and 
After, April, 1917, p. "Jij. 

* Ibid., p. 72 J. 



66 PRICES AND PRICE CONTROL DURING THE WAR 

and materials used in the various processes of production." 
The journal admits that where there is artificial or contrived 
scarcity as in shipping, a bigger slice is taken as profits.^ 

As to the views of statesmen, Mr. McKenna, in assigning 
the general rise in prices as one of the foremost causes of 
labor unrest, remarked that the main reason for that rise 
was not profiteering but " inflation, "^ and Mr. Runciman, in 
speaking in the House of Commons in August, 191 7, declared 
that the chief cause of the increase in prices was not to be 
found among profiteers — carriers or producers.^ 

The Board of Trade Prices Committee conducted a careful 
investigation of specific charges of profiteering; the only 
positive results which it obtained and which are embodied in 
its final report were as follows:^ "In the autumn of 1916 
prices for potatoes were demanded by dealers very greatly 
in excess of cost of production or cost of purchase from 
farmers. . . . There was a real scarcity and the rush of 
retailers ran the price up, as with fish. In the spring of 191 6 
one tea broker was guilty of speculative overbuying ; this had 
an influence in the direction of raising prices." 

The committee was appointed on June 17, 1916, by the 
President of the Board of Trade to report on the supply and 
prices of foods. The first report, a preliminary one on milk, 
meat and bacon, was made on September 22, 1916. The 
second report, on bread, flour and wheat, and the third, on 
sugar, tea and potatoes, were presented in November and 
December, respectively, but they were not published till the 
spring of 1917. 

With regard to the rise in the price of milk, the committee 
found that, while combination among farmers has helped 
to secure the higher prices, it was mainly an increase in de- 
mand and an increased cost of production that have been 
responsible for the rise. In particular the increased demand 
of the producers of margarin, tinned milk and milk chocolate, 

1 Tyie Nation, October 21, 1916. 

2 The Economist, July 28, 1917, p. in. 

' The Liberal Magazine, August, 191 7, p. 363. 

^ The Nineteenth Century, April, 1917, pp. 742-743. 



GREAT BRITAIN 67 

together with that of the hospitals, has helped to force up 
prices. The increased price of cheese has had a similar effect. 

The gains made through high war prices have gone, accord- 
ing to the committee's report, chiefly to the primary produ- 
cers. That retail dairying in London has of late years been 
a much less profitable business than formerly is sufficiently 
indicated by the evidence which has been produced to the 
committee by a number of the principal firms in the trade. 
On the other hand the business of wholesale distribution must 
be held to have prospered. A prospectus issued by United 
Dairies, Ltd., formed in 191 5 to combine a number of whole- 
sale concerns, announced that for the year ending April 3, 
1 91 5, their combined profits, after providing for all establish- 
ment charges, depreciation, directors' remuneration, interest 
on debentures and the dividend of 6 per cent on the issued 
preference shares of the company, "would have been more 
than sufficient to pay a dividend of 14 per cent on its issued 
ordinary shares." It should be noted, however, that these 
profits are asserted by the company to have been largely 
made in the manufacture of dairy utensils and of condensed 
milk, cheese and cream, and it is even claimed that the 
largest of the combined companies lost heavily on its milk 
distribution in London during the eighteen months ended 
March, 1916. It would appear that the rise in wholesalers' 
milk prices has been roughly parallel to the rise in the farmers' 
contract prices. ^ 

Costs of distribution in London and large towns generally 
form the largest item in the price after the milk leaves the 
farmer. In provincial towns before the war the cost of 
delivery was reckoned at about 4.^6. to 6d. per gallon. 
In the case of certain farmers' cooperative societies, who 
collect milk and sell direct to the consumer, organization 
is alleged to have already, in some areas, effected a con- 
siderable reduction in charges. It is calculated by one 
farmers' milk supply association, which sold in a small town 

1 Interim report of Great Britain Board of Trade Committee on Prices, Cd. 8358, 
1916, pp. 12-13. 



68 PRICES AND PRICE CONTROL DURING THE WAR 

In Lancashire over £4,500 worth of milk in 1915, that the cost 
of distribution from the depot to the consumer is nearly 4d. 
per gallon. Even on this basis, however, it hardly appears 
that the higher charge for town distribution is exorbitant, the 
process there consisting in a multitude of deliveries, involving 
relatively more labor. Under present conditions, the average 
cost in London must apparently be reckoned at at least 6d. 
per gallon and dairymen contend that it is considerably more. 
It has been reckoned that London dairymen could still afford 
to sell at id. per quart less over the counter than is charged 
for milk delivered to the customer. But by far the greater 
amount of milk is sold by delivery; and, except in the poorer 
districts, there is no likelihood that a sufficient number of 
customers to make a business pay would consent to go or 
send for their milk in the early morning. 

Concerning profits on meat, the committee has the follow- 
ing to say : 

It may be taken as certain that considerably increased 
profits have been made during the w^ar by cattle breeders in 
the United Kingdom and in foreign countries, especially in 
South America. This is the first main item in the increase of 
price; and as regards the cattle breeders of the United King- 
dom It is partly offset by the increased cost of labor and of 
feeding stuffs. An increased amount of capital being thus 
involved in the handling of the product at each stage, it may 
be assumed that additional profits have been reaped at some 
of them. 

So much has been said of the large profits of meat trusts and other meat dealers 
that the committee have been at special pains to investigate in that direction. 
One of the two British companies (in Argentina) has paid a I2| per cent dividend 
for 1915, besides putting £100,000 to reserve. In 1914 that company had paid no 
dividend. . . . The other British company showed a total profit of over 
£142,000 in 1915 as compared with less than £26,000 in 1914, and a loss in 1913. 
. . . Details of the dividends of the " British American" meat firms, which are 
private companies, are not available to the committee, but it was admitted by a 
representative of one of these companies that profits had been made in 1 9 14-1 5 after 
two years of loss in 1912-13. On the whole, no such profits appear to have been 
made in the meat importing trade as are recorded in some of the leading "war 
industries." . . . The substantial cause of increased profits is rather the short- 



GREAT BRITAIN 69 

age of supply than any process of combination, and but for the government control of 
colonial meat, prices might be higher. Reduction of prices at foreign and home 
sources of supply is obviously difficult under existing circumstances. ^ 

Although bacon prices have risen considerably less than 
those of other meat (about 46 per cent on the average as be- 
tween July, 1914, and September, 1916), there has been 
relatively more excitement concerning them than has been 
shown with regard to other foods. This appears to be due 
to the fact that in the early part of the summer a large quan- 
tity of American bacon was put in cold storage in Liverpool, 
the inference being drawn that there was a design to force up 
prices artificially. In view of this and other commonly ex- 
pressed opinions as to the operation of "rings" in the bacon 
trade, the committee have made a searching investigation 
without, however, finding any proof that any serious infla- 
tion of prices has been so produced. 

Although a large quantity of American bacon was put in 
cold storage in 191 6, it was part of an unusually large im- 
portation, and cold storing was practically a necessary step. 
Reliable evidence has been given to the effect that quantities 
of American bacon have been sold in England during the 
summer at an actual loss to the American packer.^ 

The South Wales Commissioners of Inquiry into Indus- 
trial Unrest who tried to find out "who and what causes are 
really responsible for the great increase in the cost of the 
food supplies" had to "exonerate" retailers, shipowners 
and bakers.^ 

In the case of bread, the precise amount of money taken 
at each stage has been worked out by Mr. R. J. Torner. He 
took Canadian wheat, marketed at Winnipeg, at a time when 
it was delivered in London at 72s. a quarter and bread was 
9^d. the 4-pound loaf. The result was as follows: 

1 Interim report of the Great Britain Board of Trade Committee on Prices, 
pp. lo-ii. 

2 Ibid., p. 13. 

3 E. Cannan: "Industrial Unrest," The Economic Journal, December, 1917, 
p. 461. 



70 PRICES AND PRICE CONTROL DURING THE WAR 

Per Quarter Per Loaf 

Price obtained by farmer 50s. 5d. 

Lake and rail transport and elevator charges 6s. f d. 

Commission to dealers, brokers and shippers is. 3d. |d. 

Insurance to London is. 3d. id. 

Freight 12s. i^d. 

London commissions & exchange is. 3d. |d. 

Cost — 2|d. per loaf to London, leaving 2jd. to meet all expenses after arrival 
(this includes transportation to the mill, grinding, transportation to the baker, 
baking, delivery and the "middlemen.")^ 

From the preceding it is obvious that if "profiteering" 
means the holding up of suppHes for the purpose of forcing 
up prices, if it stands for plunging into this or that market 
in order to obtain speculative gains out of national needs, then, 
all the mob oratory and public agitation notwithstanding, 
there has been very little profiteering in England. The subject 
has been carefully investigated by competent parties and 
hardly, if ever, were there found evidences of any material 
amount of pure speculation. " It may have been practised lo- 
cally and in a small way, but even that has not been proved." 

If on the other hand "profiteering" means the securing in 
the ordinary course of business of a margin of profit on the 
goods offered for sale, if profiteering is equivalent to taking 
advantage of market conditions to make money without 
any illegitimate maneuvering, then no doubt there has been a 
great deal of so-called profiteering, for a great deal of money 
has been made.^ But, as has been asked, "will those who 
denounce profiteering be prepared to compensate the profit- 
eer when the market turns against him and he suffers a loss?"^ 
And if in the case of the small shopkeeper, the food dealer, it 
were possible to get rid of "profiteering" by fixing prices on 
the basis of "prewar profits," would this be just? Why 
should the retail dealer be restricted to prewar profits, while 
the wage earners claim and receive special wages? Has not 
his cost of living gone up?^ 

Some idea of the rise in profits since the beginning of the 
war may be gained from the returns to the excess profits 

'Shadwell, op. cit., p. 743. 

2 Ibid. 

3 The Quarterly Review, July,i9i7,p. 49. 
^ The Spectator, August 4, 1917, p. no. 



GREAT BRITAIN 7 1 

tax and the Income tax. In 19 14 income and property tax 
(with supertax) yielded £47,000,000, In 1917 £205,000,000. 
Excess profits duty, nil in 1914, In 1917 yielded £140,000,000. 
While admitting that there are certain difficulties In the cal- 
culations of the rise in profits — as there are no returns of 
any Capital Gazette — Professor Nicholson expresses the view 
that there can be no doubt as to the altogether abnormal rlse.^ 

A certain amount of light on the question of profits and 
profiteering is shed by the investigations of the Economist 
into the earnings of joint-stock undertakings; these undoubt- 
edly represent only a proportion of the industry and commerce 
of the country, and many joint-stock enterprises are not in- 
cluded in the Economist' s summaries, but nevertheless the 
tables presented by this periodical are illuminating and will 
repay a careful study. 

The net profits of 928 companies whose reports appeared 
in the Economist in 1915 declined from £69,134,726 in 1914 
to £66,926,983 or 3.2 per cent. The profits of 932 companies 
whose reports appeared in 1916 were £86,587,823, showing 
an increase of £19,357,781 or 28.6 per cent as compared with 
the previous year. The average profit per company in 191 6 
was £93,000 against £72,100 in 1915 and £76,000 in 1914. 

If one compares the summary of net profits for the year 
ended June 30, 19 17, with the preceding year, one finds a 
decline in the percentage increase of profits; they rose from 
£70,773,703 to £82,065,792 or 16.0 per cent, instead of 28.6 
per cent as they did in the calendar year 191 6. ^ This was 
due not to a falling off in earning power but to the fact that 
in 191 6 uncertainties as to amounts due for excess profits 
taxation have to a large extent been cleared up, and many 
companies which a year ago made a reserve for the duty have 
this time deducted the amount before striking the profit 
figure. 

The reports of 1,200 companies for the calendar year 1917 
record a still further drop in the proportionate rise of profits. 

^ J. S. Nicholson: "Statistical Aspects of Inflation," Journal of the Royal Statis- 
tical Society, July, 191 7, p. 479. 

^ The Economist, January 6, 1917, p. 7. 



72 PRICES AND PRICE CONTROL DURING THE WAR 

The Increase was from £82,537,238 to £90,760,604 or only 
10 percent.^ 

The following tables summarize the results of the Econo- 
mist's quarterly Investigations since January i, 1914: 

Reports Pub- 
lished in No. of 1914 1915 Increase Decrease 
Quarter Ended Companies 

i/ i- 3j /q kj % 

March 31 293 20,790,280 19,799,226 991,054 4.8 

June 30 285 23,666,65222,375,049 1,291,603 5.4 

September 30. .. . 142 10,649,014 10,707,025 58,011 0.5 

December 31 ... . 208 14,028,780 14,045,683 17,903 1.3 

928 69,134,726 66,926,983 2,207,743 3.2 

Reports Published in No. of 

Quarter Ended Companies 1915 1916 Increase 

£ £ £ % 

March 31 286 20,047,736 23,536,746 3,489,010 17.4 

June 30 311 23,791,858 33,924,702 10,132,844 42.6 

September 30 139 10,439,072 13,358,836 2,919,764 27.9 

December 31 .. 196 12,951,376 15,767,539 2,816,163 21.8 

932 67,230,042 86,587,823 19,357,781 28.6 

Reports Published in No. of 

Quarter Ended Companies 1916 1917 Increase 

£ £ £ % 

March 31 253 21,073,682 23,616,670 2,542,988 12. a 

June 30 330 26,309,573 29,322,747 3,013,174 II. 4 

September 30 337 17,477,002 18,260,507 783,505 4-5 

December 30 380 17,676,981 19,560,680 1,883,699 

1,200 82,537,238 90,760,604 8,223,366 10. o 

There are many Instances of exceptionally large profits 
made by Individual industrial concerns; thus thirteen cotton 
spinning companies In Lancashire have made during the last 
quarter of 1917 and the first quarter of 1918, £95,287. The 
share capital of these concerns amounts to £669,991, with 
loans of £273,197. After allowing for depreciation and 
interest on loans, the profit on share capital works out at 
over 45 per cent per annum. 2 

The profits of Courtauld's, Limited, silk and artificial silk 
yarn manufacturers, rose from £757,110 In 1915, to £1,099,- 

1 TJie Economist, January 6, 1917, p. 7. 

2 Ibid., April 13, 191 8, p. 599. 



GREAT BRITAIN 73 

078 in 1916 and £1,173,891 in 1917. For the past two years 
the company declared a dividend of 30 per cent.' 

The twelve boot and shoe manufacturing companies whose 
reports appear in the Economist have raised their dividends 
from 5 and 6 per cent in 1914 to 10, 14I and 17^ per cent in 
1917.2 

It is difficult to offer precise figures with regard to the 
amount of profits earned by munitions firms subject to excess 
profits duty or munitions levy. In the first report (session 
1 91 8) of the Committee on National Expenditure one finds a 
table which has been put in to illustrate one year of control. 
It appears from this table that in the aggregate 26 firms se- 
lected at random earned during that year nearly five times the 
amount of their standard profit. In the case of one engineer- 
ing firm, the profit was 340 per cent on the capital as it stood 
on the books of the company, while in the case of another com- 
pany on an order for 1,000 products, priced at about £4,000 
each, the profit amounted to £1,300,000.^ 

The second report of the Public Accounts Committee of 
the House of Commons, No. 115, 1916, speaks of clearly 
exorbitant prices demanded from the government, which 
led to threats of confiscation. The balances of many indus- 
trial firms show that they doubled their profits. 

"Workington Iron and Steel" profits were £485,410 in 
191 5-16, an excess over the firm's profits in 191 3-14 equal to 
£278,839 or 135 per cent; "Calico Printers' Association" 
profits were £1,104, 73^ in 191 5-1 6 as compared with £443,786 
in 1913-14; the returns from a shipbuilding concern showed a 
187 per cent increase."* 

Instances of exceptionally large individual profits can be 
multiplied indefinitely. Shipping interests seem to have fared 
particularly well since the outbreak of the war. The profits 
of Cunard Company, for instance, notwithstanding the loss 
of passenger traffic, rose, because of the huge increase in 

1 The Economist, March 9, 1918, p. 423. 

^ Ihid., March 30, 1918. 

^ Iron and Coal Trades Review, March 15, 1918, p. 277. 

^ Vestnik Evropi {European Messenger), December, 1916, p. 268. 



74 PRICES AND PRICE CONTROL DURING THE WAR 

earnings from carrying freight, from £853,374 in 1913 to 
£1,003,553 in 1914, £1,347,357 in 1915 and £2,339,752 in 
1916.^ As to dividends on tramp steamers, if the returns on 
Mr. Bonar Law's investment in single ship cargo companies 
are indicative of conditions prevailing in tramp traffic in 
general, the possession of tramps was certainly a paying propo- 
sition. On £8,110 invested by Mr. Bonar Law he received, 
after excess profits tax had been paid, £3,624 in 191 5 and 
£3,847 in 1916; £7,471 on £8,110 in two years. ^ 

A study of the profits of London department stores is of 
particular interest, as it is indicative of the large measure of 
general prosperity which is being enjoyed by the population 
of the metropolis. In many instances an increase in the 
business of the stores is limited only by the depletion of staffs 
and by the inability to obtain new supplies. 

The net profits of the London stores during the last five 
years were as follows : ^ 

Company 

Army and Navy. . . . 
Civil Service Supply . 

D. H. Evans 

Dickins & Jones 

Frederick Gorringe . . 

Harrod's 

Jay's 

John Barker 

Liberty & Co 

Maple & Co 

Mappin & Webb. . . . 

Selfridge's 

Spencer, Turner. . . . 

Swan & Edgar 

Thomas Wallis 

William Whiteley . . . 



The net profits of the above companies were in 191 7 
£359,312 higher than in 1916, and £321,605 higher than in the 
last full year of peace. From the nature of the goods sold it is 

1 The Economist, April 21, 1917, p. 692. 

2 Ihid., July 7, 1917, p. 10. 

3 Ibid., April 20, 19 18, p. 633. 



I9I3 


1914 


1915 


1916 


1917 


£ 


£ 


£ 


£ 


£ 


193.739 


226,909 


196,554 


210,097 


241,366 


44,911 


39,031 


43,391 


48,363 


55,722 


69,923 


44,030 


48,438 


59,005 


69,318 


60,406 


43,188 


26,722 


50,788 


66,105 


33,222 


31,205 


32,227 


39,543 


49,992 


295,181 


309,227 


202,884 


235,046 


282,293 


40-857 


18,061 


12,222 


15,197 


15,917 


63,907 


76,066 


63,141 


66,001 


85,284 


61,534 


30,272 


13,257 


37,787 


46,780 


206,930 


133,402 


117,267 


158,051 


285,401 


54,250 


25,639 


Dr. 21,049 


30,380 


46,780 


112,396 


115,831 


131,596 


206,962 


240,832 


37,194 


30,290 


51,873 


56,623 


55,675 


16,948 


6,997 


6,593 


34,021 


39,365 


23,118 


20,660 


21,432 


30,656 


33,241 


70,632 


59,545 


55,481 


66,823 


77,745 


1,385,050 


1,210,353 


1,001,031 


1,347,343 


1,706,655 



GREAT BRITAIN 75 

obvious that the appeal for war economy has been woefully 
neglected by the London shopper.' "Shops and stores vie 
with breweries, hotels and restaurants in the prosperity which 
they enjoy. "^ 

That the Economist does not consider retailers responsible 
for high prices is apparent from the remark of this periodical 
that "the rise in prices has, of course, been a problem which 
has required careful handling on the part of the shop- 
keeper."^ The retailers' problem has been that of shifting 
the increased price to the customers, at the same time main- 
taining their trade. The London stores have succeeded in 
this, in many instances even increasing their turnover. The 
branch shop companies have not fared so well as the metro- 
politan department stores, although their profits continued 
to be sufficient to permit them to pay dividends varying from 
6 per cent to 30 per cent.^ 

In a fairly representative group, which includes two 
clothing and hosiery companies, two grocers and provision 
merchants, two confectioners, two boot and shoe companies 
and two dairy companies, there is only one concern which 
did not declare any dividends between 1914 and 1916. This 
company is Eastman's wholesale and retail butchers. Their 
profits fell from £72,964 in 1913 to £32,588 in 1916. The 
company is one of the few whose trade has been seriously 
curtailed by the closing of shops, because of the lack of ex- 
perienced men to handle the business. The decline of profits 
in 1 91 5 was attributed by the company to the fact that since 
the government became heavy buyers of meat prices rose 
enormously. Supplies released for civilian consumption 
"were sold at the highest wholesale prices on record, and it 
was impracticable to advance . . . retail prices sufft- 
ciently to earn a fair margin of profit."'* Eastman's net 
profits rose again to £50,442 in 1917.^ 

^ The Economist, June 9, 1917, p. 1063. 

2 Ibid., April 13, 1918, p. 596. 

^ Ibid., May 12, 1917, p. 804. 

* Ibie., May 10, 1917, p. 470; May 12, 1917, p. 804. 

^ Ibid., March 16, 1918, p. 464. 



76 PRICES AND PRICE CONTROL DURING THE WAR 

The changes in the amount of profits made by the branch 
companies since 1913 were as follows: 

Net Profit 

1913 1914 1915 1916 1917 

£ £ £ £ £ 

Chas. Baker & Co 17,634 12,749 17.488 15,967 I5,349 

Eastman's 72,964 47,225 41,136 32,588 60,441 

Freeman, Hardy& Willis 90,330 97-338 103,104 118,006 

Fuller's 13,475 5,653 8,978 8,702 12,501 

Home and Colonial. .. . 179,486 225,828 251,657 256,877 226,156 

Hope Brothers 41,553 35,122 27,261 "51,780 58,171 

International Tea Stores 99,000 132,733 163,874 109,619 140,887 

J. Sears & Co 55,3i2 61,634 75,679 65,321 

Maynard's 10,716 12,202 13,733 26,512 43,322 

Maypole Dairy 481, 555 488,026 528,275 462,751 736,354 

Welford's Surrey Dairies 20,417 19,724 22,088 17,470 

* Eighteen months. 

These profits have permitted them to declare the following 
dividends : 

1913 

% 

Chas. Baker & Co 6| 

Eastman's 4 

Freeman, Hardy & Willis 15 

Fuller's I7i 

Home & Colonial 20 

Hope Brothers 6 

International Tea Stores 8 

J. Sears & Co 12^ 

Maynard's 10 

Maypole Dairy 162^ 

Welford's Surrey Dairies 8 

The net profits of Lipton, Limited, which dropped from 
£183,488 in 1914 to £122,673 in 1915, rose to £169,444 i^i 
1916 and to £302,587 in 1917, the highest point in the com- 
pany's history.^ 

In order to meet any possible criticism on the part of the 
consumer that these results were obtained at his expense and 
in order to show that high prices do not necessarily mean high 
profits, the directors state that "by selling goods of the highest 
standard of quality at the lowest possible prices, the com- 
pany's shops are more popular than ever and hundreds of 
thousands of new customers have been attracted thereto, 

^ The Economist, June 2, 1917, p. 1026. 





Dividends 






I9I4 


1915 


1916 


1917 


% 


% 


% 


% 


3 


7h 


8 


8 


ml 


nil 


nil 


5 


15 


nh 


174 




10 


7\ 


7h 


10 


25 


30 


30 


30 


5 


4 


6 


8 


9 


10 


7 


10 


i7h 


i7h 


i7i 




10 


10 


20 


40 


100 


100 


25 


125 


8 


8 


6 





GREAT BRITAIN 77 

and the very much larger turnover consequent thereon has 
resulted In substantially Increased earnings." Nevertheless, 
as the Economist remarks, the following eloquent figures are 
not likely to be lost sight of by those who are agitating for 
the abolition of "profiteering" : ^ 

Gross Expenses Net Deprecia- 

Year Ended March Profits etc. Profits tion Dividends 

£ £ £ £ % 

1913 315-606 111,967 203,639 41.095 6 

1914 314.949 131,461 183,488 23,202 6 

1915 272,182 149,509 122,673 "262,274 nil 

1916 295,089 125,645 169,444 45.104 nil 

1917 442,776 140,189 302,587 44.057 7h 

" Including £220,889 drawn from "premium on shares account." 
^ The Economist, June 2, 1917, p. 1026. 



CHAPTER V 
The Condition of Workmen 

When the war broke out many mills and factories, antici- 
pating a reduced demand, curtailed their activities, and in 
consequence of this large numbers of wage earners were 
thrown out of employment.^ Many merchants also reduced 
their staffs and cut the wages of their employes. ^ There was 
a general fear that business would greatly diminish and that 
widespread destitution would result. To meet the emergency, 
the Prince of Wales Fund was established and several million 
pounds were collected for the purpose of relieving the antic- 
ipated distress. 

However, those who predicted the ruin of industrial and 
commercial enterprises, with all the misery that such a break- 
down would entail, proved false prophets. The revival of 
business came almost on the very heels of the shock which the 
declaration of war produced. 

The rate of unemployment in the registered trades of Eng- 
land and Wales rose in August, 1914, to 7 per cent, or to nearly 
treble of what it was during the month of July, but by the 
end of November it fell back to the July rate and since that 
time the percentage of unemployment among English trade 
unionists has been steadily declining; during the latter part 
of 1 91 5 the ratio was 0.6 per cent and at the end of 191 6 it 
was again only half of that recorded for December, 191 5.* 
This low level was maintained through the first half of 1917; a 
slight reaction set in in September, when the percentage of 
unemployment rose to 1.3;^ this was almost entirely due to 
the orders restricting the consumption of cotton. In record- 
ing this increase, the Labour Gazette adds that nearly all prin- 

1 The Round Table, vol. vi, p. 73. 
- The Nation's Business, November, 19 17, p. 30. 
^Labour Gazette (British), January, 1917, p. 4. 
^ The Economist, November 24, 1917, p. 387. 

78 



GREAT BRITAIN 79 

cipal industries were fully employed and that in many cases 
there was much overtime work. One may also add that pay- 
ments were provided to textile operatives who became idle as 
a result of the restrictions of the Cotton Control Board, adult 
men being given 25s. per week, adult women 15s. and young 
people from 3s. to 12s., dependent on the character of the 
work previously done and whether they were employed full 
time or were half timers.^ The unemployment in the cotton 
industry is in the nature of organized short time — the opera- 
tives affected not being discharged, but merely suspended in 
rotation for one week out of four or more according to circum- 
stances. ^ At the end of January, 1918, the unemployment 
was i.o per cent, and at the end of February 0.9 per cent. 

The following table shows the mean annual percentages of 
unemployment among trade unionists reporting to the depart- 
ment in each of the years 1902-1917: 



1902 — 4.0 


1906—3.6 


I9IO— 4.7 


1914—3-3 


1903—4.7 


1907—3-7 


I9II— 3.0 


I915— I.I 


1904 — 6.0 


1908—7.8 


I9I2— 2.4 


I916 0.4 


1905— 50 


1909—7.7 


I913— 2.1 


I917— 0.7 



These figures are confirmed by the statistics of unemploy- 
ment obtained in connection with National Unemployment 
Insurance in certain trades, according to which the monthly 
percentage unemployed in 1917 was 0.6, compared with 0.6 
in 1916, 1.2 in 1915, 4.2 in 1914 and 3.6 in 19x3.^ 

Another gratifying feature in the industrial situation has 
been the decline of pauperism. Just as in the rate of unem- 
ployment, an increase manifested itself at the outset of the 
war, the rise reaching its maximum on August 22, 19 14, when 
the figures recorded for England and Wales were 600,737, as 
compared with 559,476, the corresponding date in 191 3.'' 
After that date pauperism fell off steadily toward its normal 
level and by January, 191 5, the figures showed a substantial 
decrease, this decrease, apart from the usual seasonal fluctua- 

1 Labour Gazette, October, 1917, p. 355- 

2 Ihid., March, 1918, p. 91. 

3 Ibid., January, 1918, p. 3. 

* Ibid., November, 19 16, p. 404. 



80 PRICES AND PRICE CONTROL DURING THE WAR 

tions, being since maintained. This has been due to great 
demand for man-power because of the war. 

The following table shows for England and Wales the total 
number of paupers in receipt of poor relief at the end of March 
in each of the years 1914, 1915 and 1916: 

1914 1915 1916 

Casual paupers 8,609 5.279 4,056 

Paupers in receipt of outdoor medical relief only 19,868 18,970 15,997 

Lunatics in lunatic asylums 100,941 102,975 100,182 

Other classes of paupers 643,643 627,900 561,048 

In December, 1917, compared with December, 1916, the total 
number of paupers decreased by 24,922.^ 

The absence of distress since the war has also been shown 
in other ways. In the early days of the war a government 
Committee on the Prevention and Relief of Distress was 
appointed, the country was organized under local representa- 
tive committees and, as previously stated, a National Relief 
Fund (the Prince of Wales Fund) was opened. "The experi- 
ence of these committees showed . . . that, after indus- 
try had readjusted itself, assistance was required only in 
isolated cases; at the end of 191 6 it was practically confined to 
watering places on the east coast, where lodging house keepers 
have suffered exceptionally in consequence of the war."^ 

The records of the distress committees, formed under the 
Unemployed Workmen Act, 1905, give similar results. In 
December, 1914, the number of persons receiving relief from 
such committees amounted to 6,055, or nearly double the 
number in December, 1913. In December, 1915, the number 
of persons receiving such relief had fallen to the insignificant 
total of 74; a small increase (to 289) was recorded for Decem- 
ber, 1916.^ 

Concurrently with the decline in the number of unemployed 
and of paupers, there has been an increase in the number of 
women engaged in gainful occupations. According to the 
findings of the British Association for the Advancement of 

^ Labour Gazette, January, 1918, p. 24. 
"^ Ibid., November, 19 16, p. 405. 
^ Ibid., January, 1917, p. 25. 



GREAT BRITAIN 8 1 

Science, which investigated the effect of the war on the Indus- 
trial conditions of Great Britain, the number of occupied 
women in the United Kingdom in July, 1914, was 5,020,000. 
In mid-April, 1916, the number had risen to 5,490,000, an 
Increase of 470,000 in 21 months of war. This Is about five 
times the normal peace time Increase, which for such a period 
would have been only about 94,830.'- 

As the committee's report points out, this accelerated rate 
of increase is not due entirely to the recruiting of additional 
women into industry — i.e., of women entering Industry for the 
first time. Probably fewer women have married and fewer 
have retired from industry on marriage. The Labour Gazette, 
which in its statistical tables does not take cognizance of 
women occupied in domestic service or In very small work- 
shops (such as exist, for Instance, In the dressmaking trade), 
gave the number of females occupied in July, 1914, as 3,272,- 
000; by January, 1917, this number rose to 4,344,000, an 
increase of 1,072,000, all of which but 1,000 represented direct 
replacement of men by women. ^ In October, 191 7, the 
number of men replaced by women was 1,392,000.^ The fig- 
ures are based on returns made by employers to the Industrial 
(War Inquiries) Branch of the Board of Trade. 

The unprecedented demand for labor, coupled with rising 
prices, led to a marked increase In wages, much of this increase 
being given as war bonuses or special advances in rates limited 
to the period of the war. Up to the end of December, 1916, 
nearly six million work people received some advance. On 
an average, the weekly Increase was about 6s. per head; in 
some industries directly concerned with the supply of war 
requirements It ranged from los. to 12s. The increase in 
weekly wages for 1915 was £677,700, for 1916 £595,000, for 
1917 £2,183,000.4 

1 Labor, Finance and the War, edited by A. W. Kirkaldy, quoted from Monthly 
Review of the U. S. Bureau of Labor Statistics, March, 1917, p. 335. 

^Labour Gazette, April, 1917, p. 125. 

^ The Economist, November 24, 191 7, p. 837. 

* Labour Gazette, January, 1917, p. 3; see also The Economist, February 16, 1918, 
p. 264. 



82 PRICES AND PRICE CONTROL DURING THE WAR 

The Board of Trade discontinued in 19 14 the pubhcation 
of index numbers of money wages. Taking 1900=100 as a 
base, the figures for 191 3 were 106.5. Professor Nicholson's 
estimates are 107 for 1914, 117 for 1915 and 137 for 1916. 
Mr. Kitchin's index number for 1916 is only 126. ^ 

It is obvious that the increase in the rates of wages was 
much below the increases recorded in the price of food and 
other necessaries, but the figures take no account either of 
the increased income of the family or of the rise in earnings 
due to greater regularity of employment, overtime and night 
work, transfers of individuals to higher paid places, speeding 
up of piece work, etc.^ It is to be regretted that no statistics 
are available which would show the extent to which the total 
earnings, as distinct from rates of wages, have increased since 
the beginning of the war. 

In a letter to the Economist for September 22, 191 7, Mr. 
W. R. Lawson surmises that "the national wages bill has been 
more than doubled, probably more than trebled." He con- 
siders that the fabulous profits that are said to have been 
made were only a sequel to the fabulous wages and he holds 
both responsible for the rise of commodity prices. The rise 
of wages and profits led to an increased demand for goods and 
intense competition among buyers forced the prices up. 

Writing at a much earlier date, Mr. C. H. d'E. Leppington 
objected as far as Great Britain was concerned to a statement 
contained in the U. S. Bureau of Labor bulletin on food prices 
during the war, that "the hardship caused by the increased 
cost of living has in many cases been aggravated by a decrease 
of purchasing power among the working classes." According 
to Mr. d'E. Leppington,^ it can not be held to apply to Great 
Britain, in view of the enormous wages now earned. 

The report on national insurance covering the administra- 
tion of the law during the last three years bears witness to the 

^ J. S. Nicholson: "Statistical Aspects of Inflation," Journal of the Royal Statistical 
Society, July, 1917, p. 489. 

^ Interim report of the committee appointed by the Board of Trade to investi- 
gate the principal causes which led to the increase of prices of commodities, p. 5. 

^ The Economic Journal, March, 1916. 



GREAT BRITAIN 83 

fact that the average physical condition of men, women and 
children has vastly improved. The report sets forth that 
from the beginning of the war sickness among both men and 
women has rapidly and steadily decreased. This is particu- 
larly true of women. In 19 14 the average cost for all women 
getting the benefits of the insurance fund was five cents a 
week. In 191 5 it fell to three cents, in 19 16 to two cents; the 
figures for 1917 have not been made up, but another important 
decrease was expected.^ 

The insurance commissioners attribute this result to indus- 
trial conditions under which due attention is paid to the wel- 
fare of the worker and wages are high enough to insure a 
sufficiency of good food. Before the war millions of people 
lived on starvation wages in misery and squalor and the nation 
was confronted with a progressive physical deterioration 
among the mass of people. ^ 

Another indication of increased purchasing power of the 
population and of the volume and variety of employment 
which the war provided may be seen in the statistics of busi- 
ness failures. These declined from 7,191 in 1913 to 5,510 in 
1914, to 4,864 in 1915, to 3,210 in 1916 and to 2,255 in 1917. 
To some extent, the decline has been due to special protective 
legislation which has been brought into operation since the 
outbreak of war, but a more important factor still has been 
the general, though of course highly artificial, prosperity 
resulting from the active manufacture of war materials at a 
steadily rising level of prices.^ Kemp's Mercantile Gazette 
comments on these figures of failures: "The millions paid 
away weekly in wages and salaries are being freely spent by 
all these classes who are now more prosperous than they have 
been before. So the shops and the dealers are doing well, 
and, therefore, the wholesale and manufacturing firms are 
making much money, and making it quickly."* 

It is immaterial for the purpose in view to settle here the 

1 Literary Digest, March 23, 1918, p. 84. 

2 Ihid., March 23, 1918, p. 80. 

^ Bankers' Magazine, February, 1918, p. 177. 
^ Ihid., February, 1918, p. 179. 



84 PRICES AND PRICE CONTROL DURING THE WAR 

question as to whether this revival of industrial and com- 
mercial activity was a sign of healthy development or merely 
the result of a feverish demand on the part of the government 
for services and for commodities necessary to prosecute the 
war. What is of importance is that, to use Professor Can- 
nan's description of labor conditions, "the unemployment 
percentage curve sank almost to the case of the chart ; old age 
pensioners were dragged from their retirement; thousands of 
"flappers," girls in their early teens, left their trivial home 
tasks and peopled shanties run up for government depart- 
ments in St. James's Park and the Embankment Gardens, and 
hundreds of thousands worked in munition factories every- 
where, while their brothers, the "flippers," got promotion at a 
rate which suggested that Father Time must have taken to an 
aeroplane. Wages in the new occupations were very high, 
and even in the depressed trades "war bonuses" had to be 
given to retain a much diminished number of workers. So 
far as money receipts were concerned, the working classes 
never had such a glorious time.''^ 

According to Mr. Paish, "the additional earnings of the 
working classes arising from the shifting of labor to more 
highly paid industries, full employment with much overtime, 
advances in the rates of wages and allowances to the families 
of soldiers and sailors, completely neutralized the advance in 
the cost of living and caused the consumption of the working 
classes to show marked increase."^ 

The Spectator goes so far as to state that ' ' wages had gone 
up in the majority of cases far more than prices had risen. 
In many instances wages have risen three or four hundred per 
cent since the war began, in some instances even more; while 
prices have only risen, at most, a hundred per cent. . . . 
Introduction of female labor into workshops, together with 
the extended use of unskilled labor on nominally skilled work, 
increased the family incomes enormously." 

1 E. Cannan: "Industrial Unrest," The Economic Journal, December, 1917, p. 
455. 

2 George Paish: "War Finance," Journal of the Royal Statistical Society, May, 
1916, p. 276. 



GREAT BRITAIN 85 

Another evidence that the wage earning classes on the whole 
were not lacking the necessaries of existence was to be found 
in their unusual expenditure on the amenities and adornments 
of life.^ The reports of the retail stores, both in London and 
in provincial towns show a record of high profits, their business 
in many instances having been limited only by the depletion 
of staffs and the inability of replenishing them fast enough to 
meet the demand. Undoubtedly, many buyers in these 
stores were not industrial laborers, and, when the Economist 
states^ that from the nature of the goods sold it is obvious that 
the appeal for war economy has been woefully neglected by 
the London shopper,^ or that shops and stores have been vying 
with breweries, hotels and restaurants in the prosperity which 
they enjoy,* the periodical reproaches not only the wage earn- 
ing class for their thoughtless expenditures but the mass of the 
people who have not been willing to forego the demand for 
goods and services which the financial and industrial task 
imposed upon Great Britain urgently required.^ 

Mr. Selfrldge, the net profits of whose department store in 
London rose from £112,396 in 1913 to £240,832 in 1917, 
attributes the large increase in his turnover to the fact that 
he caught the spirit of the changing demand and provided 
facilities for supplying It. According to him, there has been 
an increase of purchases by munition workers and other wage 
earners whose incomes have risen ; they buy household neces- 
sities and comforts as well as articles of wardrobe and cheap 
jewelry; few fancy stocks such as party dresses, expensive 
gloves, etc., are sold.^ The experience of other stores does not 
corroborate Mr. Selfridge's contentions as to the decline In 
the sales of the latter goods. Thus the profits of Mappin and 
Webb — a largely luxury business — have been showing a 
steady recovery since their decline in 1914; they rose from 

1 H. S.: "Early Phases of Food Control," The Edinburgh Review, January, 1918, 
p. 116. 

^ Supra, p. 75. 

^ The Economist, June 9, 1917, p. 1064. 

* Ibid., April 13, 1918, p. 596. 

^ Ibid., February 17, 1917, p. 290. 

^ Ibid., June 9, 1917, p. 1064; also The Nation's Business, November, 1917, 
p. 30. 



86 PRICES AND PRICE CONTROL DURING THE WAR 

£25,638 in that year to £46,780 in 1917, and Jay's, the 
fashionable ladies' paradise, though not as prosperous as in the 
prewar times, seems to be able to maintain itself with a profit 
which climbed up from £12,222 in 1915 to £15,197 in 1916 
and £15,917 in 1917, as compared with £40,857 in 1913.^ Nor 
are the purchases of luxuries confined to the people in and 
around London. The Wales commissioners appointed to 
inquire into the causes of industrial unrest reported that 
the workers resented the ostentatious parade of wealth and 
fashion in the streets of Cardiff, Newport and Swansea.^ 
The Scotch commissioners found that on the whole among 
industrial workers there was no serious difficulty in meeting 
the cost of living, at least among the workers engaged in the 
largest industries in Scotland. The experience of shopkeepers 
and cooperative societies, the reduction of cases in small debts 
courts, the savings banks returns, the reports of Poor Law 
authorities, etc., all seem to indicate that on the whole the ag- 
gregate weekly incomes of industrial workers keep pace with 
the cost of living.^ 

While the purchase of nonessentials in time of war is deplor- 
able, one realizes that there are extenuating circumstances for 
such expenditures, especially on the part of the poorer classes 
of the community. They have been denied the comforts of 
every day existence and now for the first time in their lives 
they find themselves in possession of some extra money. 
They can hardly be blamed if they want to spend it or if they 
do not spend it wisely. "Changes in distribution, when the 
general standard of living is rising rapidly are likely to lead to 
extravagance, more especially in war time, when all condi- 
tions favor waste."* 

The belief seems to be general that the condition of the 
working class is one of widespread, if artificial, prosperity, 
that, measured by all ordinary tests, poor people appear to 

1 Supra, p. 74. 

2 Indiistrial Unrest in Great Britain, Bulletin of the U. S. Bureau of Labor 
Statistics, No. 237, p. 180. 

^ Ibid., p. 206. 

* A. W. Kirkaldy (editor) : Credit, Industry and the War, being reports and other 
matter presented to the Section of Economic Science and Statistics of the British 
Association for the Advancement of Science, p. 10. 



GREAT BRITAIN 87 

have an unusual amount of money at their disposal.^ What 
may be called the cheap luxury trades, the less expensive 
jewelry, pianos, amusements, etc., have been unusually flour- 
ishing, and the consumption of tea, tobacco, beer and spirits 
has gone up. The greater part of money, however, is no 
doubt being spent on clothes, food and other necessaries. 

While some maintain that the war brought an evident and 
probably a permanent rise In the standard of life not only to 
trade unionists and other laborers who were able to make 
their voices heard but also to the poorly paid unorganized 
sections of the community, there are many others who express 
a different opinion. ^ 

The Board of Trade Committee on Prices reported that 
'* while the evidence taken goes to show that there is less total 
distress In the country than In an ordinary year of peace, as 
shown by increase in the total demand for food, . . . cer- 
tain classes normally In regular employment, whose earnings 
have not risen in the same proportion as the cost of living — 
for example, the cotton operatives and some classes of day- 
wage workers and laborers — are hard pressed by the rise in 
prices, and actually have to curtail their consumption, even 
though the pressure of high prices may have been mitigated, 
In some cases, by the employment of members of a family In 
munition works and by the opening of better paid occupations 
to women. "^ 

At the request of the President of the Board of Trade a 
committee of the Royal Society made a study of the food 
supply of the United Kingdom, both before and after the 
declaration of war.* In its report the committee came to the 
conclusion that the supply available up to July 29, 191 6, has 
provided a margin of about five per cent above the minimum 
necessary for proper nutrition. To this statement is added a 
remark that "while the supply of food has been adequate for 
the support of the population, the rise In prices has accentu- 
ated the inequalities of distribution, which reduce the daily 

^ "The War and English Life," The Round Table, vol. vi, 1915-16, pp. 76-77 

2 Ihid., p. 79. 

' Report (interim) of the committee on prices, Cd. 8358, p. 5. 

*5M^ro, p. 55. 



88 PRICES AND PRICE CONTROL DURING THE WAR 

rations of many below the level of efficiency. Any curtail- 
ment of supply . , . would result in the poorer classes 
obtaining less than needful for safety — unless distribution is 
organized."^ 

There was never so much money in circulation in this coun- 
try as at present, writes Mr. Hurd, and we were never so poor; 
the queues of women and children at the shop doors, waiting 
for hours in the cold for small quantities of butter, tea, sugar 
or other articles, are a familiar picture now.^ In a previous 
article, Mr. Hurd called attention to the fact that the British 
nation, notwithstanding the popularity of the war with wage 
earners, who are employed more fully than ever and whose 
wages are exceptionally high, is confronted with increased 
economic embarrassment. "The country is becoming poorer 
day by day — using up wealth at a prodigious rate; on the other 
hand, it, or rather a large section of it, is enjoying a period of 
apparent prosperity and spending freely the war wages and war 
allowances, forgetful that a country which is ceasingto produce 
wealth to the normal extent, and whose expenditure will fall 
little short of £1,600,000,000 in the present financial year 
[i9i6],must have a rude awakening unless it mends its ways."^ 

Cost of Living 

The relation between prices and earnings can be best ascer- 
tained by following the Board of Trade's method of taking the 
standard working class budget as it has been established by 
their inquiry in the summer of 1904. This is based on 1,944 
family budgets. The average weekly income of the families 
included in the investigation was 36s. lod. per week and their 
total expenditure on food was 22s. 6d.,^ being 61 per cent of 
the family income. 

1 The Food Supply of the United Kingdom. A report drawn up by a committee 
of the Royal Society at the request of the President of the Board of Trade, Cd. 
8421, London, 1917. 

-A. Hurd: "Wages, Prices and Supplies" — A Vicious Circle, The Fortnightly 
Review, January, 1918, p. 38. 

^ A. Hurd: "British Commerce in War-time: The Abuse of Sea-Power," The 
Fortnightly Review, January, 191 6. 

■* The Cost of Living in IQ12, Cd. 6955 of 1913, pp. 299-300, quoted from A. L. 
Bowley: Prices and Earnings in Time of War, p. 16, and the Report of the Six- 
teenth Annual Conference of the Labor Party, p. 159. 



GREAT BRITAIN 



89 



This expenditure on food at the prices of the summer of 
1904 was distributed thus:^ 



s. d. 

Bread and flour 3 7 

Meat (bought by weight) .... 4 5I 

Other meat (including fish) ... o iif 

Bacon o 11^ 

Eggs. . ._ I o 

Fresh milk i 35 

Cheese o 6^ 

Butter 2 I5 

Potatoes o 11 

Vegetables and fruit o 11 



Currants and raisins o 

Rice, tapioca and oatmeal ... q 

Tea I 

Coffee and cocoa o 

Sugar 

Pickles and condiments 

Jam, marmalade, treacle and 

syrup o 

Other items i 



d. 

6 

i| 

3f 

III 

3i 

(>i 

9l 



Total 22s. 6d. 

The Board of Trade's weighted index number for retail 
prices represents the changes in the cost of different foods in 
this budget. 

From the Labour Gazette figures it appears that the same 
quantities of food have cost about 25s. in July, 1914. Taking 
25s. then as the basis, we arrive at the following results: 

RISE IN COST OF LIVING AND THE REDUCED PURCHASING 

POWER OF THE SOVEREIGN SPENT ON FOOD IN THE 

UNITED KINGDOM DURING THE WAR^ 

(Illustrated from the Changes in Cost of the Board of Trade Standard Working 

Class Food Budget) 
Cost of One Percentage 

Week's Food Increase above 

for Family July, 1914 

6 — 



16 
II 
II 
13 
13 
17 

19 
26 

35 
37 
46 



51 

62 
68 

87 

91 

93 

^ Report of the Sixteenth Annual Conference of the Labor Party, p. 159. 
^ Ibid., p. 160. 



I9I4 


July.. 




25 







Aug. 


8. . 


29 







" 


29.. 


27 


9 




Sept. 


12. . 


27 


9 




" 


30.. 


28 


3 




Oct. 


30.. 


28 


3 




Dec. 


I . 


29 


3 


I9I5 


Jan. 




29 


9 




March 




31 


6 




June 




33 


9 




Sept. 




34 


3 




Dec. 




36 


6 


I9I6 


Jan. 




37 







March 




37 


9 




June 




40 


6 




Sept. 




42 







Dec. 




46 


9 


I9I7 


Jan. 




47 


9 




Feb. 




48 


3 



urchasing 


■■ Power 


of a Sovereign 


Spent on 


Food 


20 





17 


3 


18 





18 





17 


8 


17 


8 


17 





16 


ID 


15 


10 


14 


10 


14 


7 


13 


8 


13 


6 


13 


3 


12 


4 


II 


II 


10 


8 


10 


5 


10 


4 



90 PRICES AND PRICE CONTROL DURING THE WAR 

The figures on page 89 relate to large towns ; for small towns 
the rise is two per cent less throughout. There is no infor- 
mation as to the country. These figures take no account of 
alterations in dietary. 

When allowance is made for such changes in dietary as are 
estimated by the Ministry of Food to have taken place, the 
increase in the average expenditure of a working man's family 
is considerably less than the rise in prices would indicate. 
This is brought out in the following table, which compares the 
general percentage increases in (i) prices and (2) expenditure. 
The price percentages (i) are based on the same quantities 
on March i, 1918, as in July, 1914, a basis which affords a 
measure of the increased cost of maintaining a prewar stand- 
ard of living, so far as the articles included in the Board of 
Trade statistics are concerned; and the expenditure percent- 
ages (2) are based on the actual consumption of the same arti- 
cles, so far as ascertained, at the beginning of 191 8 in compari- 
son with prewar consumption. Certain items found in the 
working class food budget, such as vegetables, fruit, currants, 
raisins, rice, tapioca, coffee, pickles, condiments, jam, mar- 
malade, are not included in the comparative statistics.^ 

Average Percentage 

Increase since July, 1914 

Small 

Large Towns United 

Towns and Kingdom 

Villages 

(i) Level of retail prices of articles of food, 

assuming same quantities at both 

dates 112 102 107 

(2) Expenditure on food allowing for 

changes in consumption 48 42 45 

Some of the changes in the dietary considered by the Labour 
Gazette are the omission of eggs, the substitution of margarin 
for butter, the reduction in the consumption of sugar and fish 
to one-half of that prevailing before the war. With such 
changes, the general percentage increase from July, 19 14, to 
December i, 1917, would have been 59 instead of 105.2 

1 Labour Gazette, March, 19 18, p. 97. 

2 Ibid., December, 1917, p. 442. 



GREAT BRITAIN 9I 

With reference to other items of expenditure, there have 
been substantial increases, except with regard to rents, which 
remained practically unaltered. The average increase from 
July, 1914, to March i, 1918, in the prices of all the items 
ordinarily entering into the working class family budget, 
including food, rent, clothing, fuel and light, etc., may be 
estimated at 85, taking for the purpose of this calculation the 
same quantities of the various items in March, 1918, as in 
1914; if increases due to taxation are included, the increase 
between the two dates was 90 per cent. According to the 
Labour Gazette, it is not possible to supplement this comparison 
of the level of retail prices generally by a comparison of ex- 
penditure similar to that given with regard to food. Combi- 
nation of the average increase in expenditure on the specified 
principal articles of food and on other items yielded in March, 
191 8, a resultant increase of between 50 and 55 per cent. 
This statement is followed by a suggestive remark that it is a 
matter of general knowledge that there have been considerable 
reductions in the quantities purchased of some commodities 
other than foodstuffs, and that the indicated increase of be- 
tween 50 and 55 per cent in expenditure is therefore somewhat 
in excess of the average increase in family expenditure since 
the beginning of the war.' If one could obtain exact figures 
showing the amounts of various commodities and services 
purchased, and if one could ascertain what have been the 
laborers' investments in governmental and other securities 
and their deposits in savings banks, then one could speak with 
a greater degree of certainty and accuracy as to what have 
been the actual effects of the war upon the British laboring 
class. 

^Labour Gazette, March, 1918, p. 97. 



CHAPTER VI 

Rise in Prices and Industrial Unrest 

There was much industrial unrest in the years just preced- 
ing the war; strikes were frequent, and the expenditures of 
the chief British unions on industrial disputes increased from 
an average of £150,000 a year for the years 1 904-1 907 to a 
sum of £1,350,000 for 1913 alone. ^ A truce between capital- 
ists and laborers followed the declaration of war. On August 
24, 1 9 14, a special conference called by the joint board of the 
Trades Union Congress, the General Federation of Trade 
Unions, and the Labor party passed the following resolution : 

That an immediate effort be made to terminate all existing trade disputes, 
whether strikes or lockouts, and whenever new points of difficulty arise during 
the war period a serious attempt should be made by all concerned to reach an 
amicable settlement before resorting to a strike or lockout. 

The number of new disputes fell from 99 in July, 19 14, to 
14 in August. The general effect of the truce can be seen 
from the fact that during the first seven months of 1914 
there were 836 disputes, involving 423,000 workers; while 
during the last five months there were only 137, involving 
23,000. By December there were only 17 disputes as con- 
trasted with 56 in December, 1913.^ 

However, this peace was but of short duration. Notwith- 
standing great dangers from outside, old quarrels were soon 
brought once more to the surface; to the former grievances 
were added some new ones, the most important of which was 
the increase in the cost of living, the main cause of which was, 
in the minds of workmen, "profiteering." According to the 
Labour Year Book, although 

there never was any express agreement, . . . there certainly was the tacit 
understanding that the maintenance of the truce depended on equal sacrifices on 
both sides. But, with the piling up of profits and the rise in food prices, there 

1 The Round Table, December, 1916, p. 67. 

2 Labour Year Book, 1916, p. 22. 

92 



GREAT BRITAIN 



93 



came among the workers a growing irritation, increasing in force, until, with the 
occurrence of specific grievances, the industrial truce came to an end, . . . 
the fact that employers showed little willingness to cease from "profiteering as 
usual" made it a one-sided bargain. "^ 

During the month of February, 191 5, there occurred no 
fewer than forty-seven disputes between employers and work- 
men, with 26,129 work people involved directly and 2,878 
indirectly." 

This unrest, during the early stages of the war, was not due 
so much to actual distress among wage earners as to the desire 
on their part to participate more fully in the fictitious pros- 
perity which war activities have created. There were some 
groups of laborers whose family earnings had not risen suffi- 
ciently to meet the added expense of living, but these were 
not to be found among the trade unionists, who were the loud- 
est in their protestations and recriminations. The unrest 
may also be attributed to an innate belief, which British 
workmen possess in common with most human beings, that 
food, being an obvious absolute necessity for existence, should 
be within reach of everybody, obtainable on terms easy to 
meet. Any enhancement in the price of such commodities 
as bread or milk is immediately resented as an injustice, a 
taking of unfair advantage which should be set right by 
public authority.^ 

The irritation of workmen was increased by evidences of 
unusual prosperity of those classes to whom increased prices 
brought large business profits. The ostentatious display of 
wealth on the part of these classes has been a continuous 
source of irritation throughout the period of the war and is 
still existent. As late as last winter we find the periodical 
press of England decrying the extravagance of women in the 
matter of dress. Furs have never been more magnificent 
than now or materials more exquisite in texture and ruinous 
in cost.* "The worst of this extravagance," writes the 

- Labour Year Book, 1916, p. 22. 

2 J. H. Jones: "Labour LFnrest and the War," The Political Quarterly, May, 
1915, p. 86. 

'A. R. Marsh: "Government Expedients for Controlling the High Cost of 
Food," The Economic World, New York, December 9, 1916, p. 747. 

* Letter to The Times, November 17, 1917. 



94 PRICES AND PRICE CONTROL DURING THE WAR 

Economist,^ "is that it is flaunted in the streets." And there 
is no reason to suggest that this feminine extravagance is 
greater than the even more inexcusable wastefulness on the 
part of the men. The paper calls attention to an article in 
the Herald, "How They Starve at the Ritz," which is worth 
study as showing how keenly organs of working class opinion 
appreciate the manner in which the well-to-do classes are 
meeting war needs by personal sacrifice. "This thoughtless 
and ignorant extravagance is . . . producing a very 
critical and dangerous spirit among the working classes, 
. . . the belief is growing that the capitalist as such is 
growing rich out of the war."^ 

In 191 5 the British Association for the Advancement of 
Science appointed a committee to investigate the causes of 
industrial unrest. This committee stated in its report that 
the revival of strife after the truce of early months of the war 
has followed upon a considerable and steady increase in prices, 
especially of food. One of the main causes of the strife was 
dissatisfaction with conditions, which prevented the workmen 
from raising their standard of living.^ Among other causes of 
unrest enumerated in the committee's report of special inter- 
est in connection with a study of price movements are: (i) 
the suspicion on the part of the workmen that they are ex- 
ploited, largely due to the lack of knowledge of economic 
conditions in the industry in which they are employed, and 
(2) war measures, especially the Munitions of War Act, which 
have operated to curtail the freedom of action of both em- 
ployers and employed. The irritation has been intensified by 
the physical strain involved in long hours of work at high 
speed, by the materially increased cost of living and by ap- 
parently big profits made by many companies, leading labor 
to believe that the nation was being exploited for private gain.^ 

1 The Economist, November 24, 1917, p. 831. 

2 Ibid., November 24, 1917, p. 831; see also The Economist, September i, 1917, 
p. 316, and The Economic World, December 9, 1916, p. 747. 

^ Labour, Finance, and the War, being the result of inquiries arranged by Sec- 
tion of Economic Science and Statistics by the British Association for the Ad- 
vancement of Science during the years 1915 and 1916, ch. ii, Industrial Unrest, 
pp. 20-57. 

* Monthly Review of Labor Statistics, April, 191 7, p. 521. 



GREAT BRITAIN 95 

The attitude of labor in general towards the governmental 
policy of noninterference with prices, which characterized 
Asquith's ministry, is manifest from many recommendations 
and resolutions that have been passed by workers' committees 
and by trade union congresses; it is also seen in the motions 
presented by Labor members in the House of Commons, as 
well as in the debates which took place there. The War 
Emergency Workers' National Committee had turned its 
attention to the question of prices from the very first, and in 
its program one finds the following proposals: 

The encouragement and development of home grown food supplies by the 
National Organization of Agriculture, accompanied by drastic reductions of 
freight charges for all produce, in the interests of the whole people. 

Protection of the people against exorbitant prices, especially in regard to food, 
by the enactment of maxima and the commandeering of supplies by the nation 
wherever advisable. 

Right through the first few months of the war there was a 
general feeling that each month prices had reached their 
climax, and that by waiting a little longer the workers would 
see prices fall. But by the new year it became clear to 
the laborers that this hope was illusory, and the price cam- 
paign was begun in earnest. The Workers' Committee issued 
a memorandum on January 21, 1915, on the prices of wheat, 
in which they proved conclusively, according to the Labour 
Year Book,^ that increased freightage rates were the chief 
cause of high wheat prices. To corroborate their statements, 
they reprinted a sentence from the Journal of Commerce for 
November 27, 1914, which ran as follows: 

The opportunities now open to British shipping are obvious. There are no more 
cut rates by subsidized German vessels. German ships being swept off the sea, 
we have now no serious competitors in the carrying trade of the world. 

In a further memorandum on coal, they showed that coal 
owners, and still more the retail coal merchants, were making 
profits from war conditions. They also called attention to 
high contract prices ruling in munition trades and to the full 
use made by capitalists in general of the law of supply and 
demand. 

1 Labour Year Book, 1916, p. 42. 



96 PRICES AND PRICE CONTROL DURING THE WAR 

On January 28, 1915, the Workers' Committee issued a 
list of recommendations, among which one finds "that maxi- 
mum prices for coal should be fixed by the government . . . 
and that the government commandeer coal supplies and dis- 
tribute to household consumers through municipal or coop- 
erative agencies." 

The Secretary of the Labor party was requested to arrange 
a series of district conferences to be held on February 13, 1915. 

Two days before the District conferences were held, a 
debate took place in the House of Commons on the following 
motion, which had been tabled by the Labor party: 

That in the opinion of this House, the present rise in the prices of food, coal and 
other necessities of Hfe is not justified by any economic consequence of the war, 
but is largely caused by the holding up of stocks and by the inadequate provision 
of transport facilities. 

This House is therefore further of the opinion that the government should 
prevent this unjustifiable increase by employing the shipping and railway facilities 
necessary to put the required supplies on the market, by fixing maximum prices 
and by acquiring control of commodities that are or may be subject to artificial 
costs. 1 

Replying to Mr. Kerens, who brought forward the motion, 
and to Mr. Clynes, who, speaking for the Labor members, 
demanded the fixing of maximum prices. Prime Minister 
Asquith stated that there were many causes which contrib- 
uted to the rise in the price of wheat. The Australian crop 
had failed ; the Argentine crop was late in coming to the mar- 
ket; there had been much speculation in the United States; 
in addition to this the closing of the Dardanelles had seriously 
shortened supply, and the war was partly responsible for the 
rise in freights.^ With regard to coal, the rise of price must 
be attributed to high freights and shortage of labor. In order 
to improve the situation, the government proposed to increase 
available shipping by releasing interned ships and ships occu- 
pied by prisoners as well as by accelerating procedure in the 
prize courts. The Prime Minister refused to resort to what he 
termed "more heroic steps" and pointed to the example of 

^Labour Year Book, 1916, pp. 42-43. 

2 69 H. C. Debates^ 756-758 (762-764), quoted from The Political Quarterly, 
May, 1915, pp. 157-158. 



GREAT BRITAIN 97 

Germany, where the fixing of maximum prices led to evasion, 
confusion and the frustration of the purposes which they had 
in view.^ 

This speech failed to satisfy a large proportion of the pub- 
lic in and out of Parliament i^ it aroused particularly a great 
deal of bad feeling among the workmen. In direct disagree- 
ment to Mr. Asquith's statements, the Labor party moved on 
February 17 an amendment in favor of maximum prices, its 
main contention being that there was no real scarcity, and 
that the rise of prices was due to machinations in the mar- 
ket.^ At all the labor conferences which took place at the time 
the following resolution was carried unanimously: 

That this conference expresses its deep indignation and disappointment at the 
refusal of the government to take effective measures to deal with the alarming 
rises in the cost of food and fuel. It appeals to the House of Commons to force 
the government to take immediate steps to relieve the unsupportable burden 
which the cost of the necessaries of life is imposing upon the working classes.* 

In commenting on the demand for the fixing of maximum 
prices, the Statist rightly asks whether if maximum prices 
were enforced, they would not have restricted the imports of 
food and made matters worse. ^ 

Continuing its attempt to force the government to action, 
the Workers' Committee called a national conference on food 
and fuel prices. This conference, which was held on March 
12, passed resolutions requesting among other things that the 
government take an active part in controlling wheat and coal 
prices.^ 

During the subsequent months of 191 5, as well as through 
the early part of 191 6, labor agitation continued, but on the 
whole conditions were such that the government did not con- 
sider the matter very seriously. Trade unions at each meeting 
expressed dissatisfaction, but it was more because of convic- 
tion that profiteering was rampant than because of real hard- 

1 69 H. C. Debates, 756-768 (762-764), quoted from The Political Quarterly, 
May, 1915, pp. 157-158. 

* The Statist, February 13, 1915, p. 245. 

3 The Political Quarterly, May, 1915, p. 158. 

* Labour Year Book, 1916, p. 42. 

5 The Statist, February 13, 1915, p. 245. 

* Labour Year Book, 1916, p. 43. 



98 PRICES AND PRICE CONTROL DURING THE WAR 

ship experienced by their members. Statesmen in general were 
for letting difficulties, if there were any, be settled through 
the natural play of economic forces. The inactivity was jus- 
tified by pointing to the example of Germany, where accord- 
ing to many British observers the fixing of prices was a failure.' 

Towards the end of the second year of the war the situation 
became more acute. The mass of the consumers began to feel 
the sting of growing prices, especially in case of such com- 
modities as fresh milk. Popular clamor was growing louder 
and louder and the pressure exercised upon the government 
stronger and more insistent. 

At a meeting of the executive committee of the National 
Union of Railway Employes held on August 2, 1916, a reso- 
lution was passed demanding an increase in wages, because 
the government had not taken effective measures to regulate 
prices of necessities.^ Labor delegation after labor delegation 
was sent to discuss matters with the representatives of the 
Cabinet. These delegations included in their demands such 
items as the conscription of wealth, the regulation of prices 
and the establishment of a normal relation between prices and 
the purchasing power of the population (through increase in 
wages, pensions, etc.). Cries of "hands off from the people's 
food" began to be heard at mass meetings held by laboring 
organizations throughout the country.^ At the Trade Union 
Congress of 191 6, the Parliamentary Committee, which was 
the executive of the congress, submitted a resolution requesting 
the nationalization of all vital industries; this resolution was 
carried unanimously almost without discussion. ^ It requested 
the appointment of a Minister of Labor and Industry, among 
whose functions should be the control and organization of 
agriculture and food supply. This control was to be exer- 
cised (a) through the direction of use of all land, (b) through 
the state's first claim on the use of all British ships, at rates 
which would yield a fixed national standard of profit, (c) 

^ Mary Stocks: "Attempt to Fix Prices in Germany," Economic Journal^ 
vol. XXV, pp. 279, etc. 

^"Concerning High Prices," Vestnik Evropi, December, 1916, pp. 257-283. 
^ The Round Table, December, 1916, pp. 76-77. 



GREAT BRITAIN 99 

through nationally owned and controlled storehouses, with 
reserves of grain, frozen meat, dried fish and all kinds of neces- 
sary storable food. The resolution contemplated also complete 
national ownership and production of all war material and 
ships of war as well as national ownership and control of all 
railways, waterways and mines. ^ 

In November, when food prices in the larger centers of 
population had increased 88 per cent above those prevailing 
in July, 1914, the executive decided to convene a national 
conference in order to concentrate the opinions of the whole 
movement in certain definite directions of state organization. 

For the first time in the history of the party the cooperative 
societies throughout the country responded officially at a 
national conference. The conference was held on January 
23-26, 191 7, and its final decisions were as follows: 

This conference, representative of National Labor organized on both its wage 
earning and consuming sides, declares that, whilst regretting the long delay of the 
government in taking action to prevent food prices rising, as they have steadily 
done during the past two years, welcomes the steps that have now been taken, 
but is of opinion that they are inadequate, and that no policy will be acceptable 
to organized Labor unless it includes: 

(a) The purchase of all imported essential foodstuffs by the government; 

(b) The commandeering or controlling of home products such as meat, wheat, 
oats, barley, potatoes and milk; and in view of the serious privations being en- 
dured by child-bearing women and young children, and the consequent destruc- 
tion of their health, the conference calls on the government to introduce immedi- 
ately a bill making it compulsory on municipalities to provide dinners and 
milk for mothers and young children, half the cost being paid from the national 
Exchequer; 

(c) The commandeering of ships and the controlling of freights and freight 
rates ; 

(d) The placing on the retail markets of all supplies so obtained and con- 
trolled at prices which will secure the full benefit of government action to the 
consumer; and the proportional regulation, on a family basis, of the sale of any 
foodstuffs in which there is a shortage of supplies; 

(e) The organization and supervision of production: the government to take 
into their own hands at least four million acres of land at present abandoned to 
grass or fallow, including any suitable land now kept as private parks; to secure 
sufficient labor and machinery to cultivate, sow and gather in the harvest from 
such land; to empower all local authorities to utilize every acre of available land 
within their areas that is now lying idle and to take over other land where required 
for spade cultivation for potatoes and other vegetables; to call upon them to make 

^ The Round Table, December, 19 16, pp. 76-Tj. 



lOO PRICES AND PRICE CONTROL DURING THE WAR 

such arrangements as they can for getting as large a proportion as possible under 
cultivation; and to advance capital to local authorities, also to cooperative 
societies, to enable them to bring additional land into arable cultivation; 

(f) The conference further demands that for the period of the war and six 
months afterwards the government shall purchase wheat on sound business lines, 
and insure that bread and flour shall be sold through the United Kingdom at a 
price not exceeding 6d. per quartern loaf; such loss as may be incurred by this 
operation to be met as a portion of the general cost of the war. 

Further, in the opinion of the conference, the supply of coal and other neces- 
saries of life should be dealt with by the government on lines similar to those 
indicated above. 

Further, the government should approach the governments of the allied 
nations with a view to impressing upon them the necessity of working on such lines 
that allied purchases shall be centralized and competition between the allies 
destroyed.^ 

Through 191 5 and 1916 the workmen confined themselves 
largely to the passing of resolutions, to the criticism of scan- 
dals and to similar acts of political agitation. What their 
thoughts and feelings were may be gathered from the follow- 
ing excerpt : 

With the closing of the food prices campaign, labor found itself economically 
in a worse position than at any time since 1900. The prices of necessities were 
still rising; wages were still, in the main, stationary; the financier, the shipowner 
the railway magnate and the contractor had been treated by the government with 
indulgent generosity; the workers were still vainly knocking at the door. As Mr. 
Cole has rightly pointed out, "Labor alone has been expected to make every 
sacrifice without return or gratitude. Employed, the worker was handed over to 
the sweater; unemployed, he fell into the clutches of the Relief Committee; as 
consumer, he was the victim of profiteers whom the government would not con- 
trol; but as soon as he stirred a finger in his own interest, he was proclaimed a 
traitor and ordered back to work.^ 

In December, 191 6, the Coalition government gave way 
to Lloyd George's administration, which, it was expected, 
would act with greater boldness and determination.^ On 
June 12, 191 7, Mr. Lloyd George appointed a commission to 
inquire into industrial unrest throughout England and Scot- 
land. The commission considered its work of such urgency 
that it divided itself into eight panels (corresponding to eight 
munition areas) ; they all reported in a month. The reports 

^ Report of the Sixteenth Annual Conference of the Labor Party, p. 5. 
^Labour Year Book, 1916, p. 46. 

^ The Economist (Commercial and Financial Review of 1916), February, 1917, 
p. 289. 



GREAT BRITAIN lOI 

bear the ear marks of too great a dependence upon hearsays, 
and of quickly drawn conclusions on insufficient and hastily 
gathered facts. 

The commissioners enumerate many reasons for unrest, 
but all put in the forefront as the leading cause the fact that 
the cost of living has increased disproportionately to the ad- 
vance in wages and that distribution of food supplies is un- 
equal. Not only do they consider this as the most important 
of all causes of unrest in itself, but its existence in the minds 
of the workers colors many subsidiary causes, in regard to 
which in themselves there might have been no serious com- 
plaints. The commissioners speak (Report of the Commis- 
sioners for the Northeast Area) of deep seated conviction in 
the minds of the working classes that the prices of food have 
risen not only through scarcity but as the result of manipula- 
tions of prices by unscrupulous producers and traders,' of 
conviction (Report of the Commissioners for the Yorkshire 
and East Midlands Area) that "insufficient steps had been 
taken by the government departments to prevent profiteer- 
ing, exploiting and plundering, such as made the poor con- 
tribute heavily to the abnormal advantages of those traders 
and others, who by their selfishness secured immense gains 
from the sacrifices and sufferings of the poor."^ 

The West Midland commissioners stated that it was abso- 
lutely necessary that the government should take immediate 
steps to reduce prices and prevent profiteering. The London 
commissioners recommended the fixing of maximum prices ; the 
North Eastern and the Yorkshire commissioners did the same, 
but added that Exchequer assistance must be given where 
necessary.^ The Scotch commissioners suggested that either 
steps should be taken to reduce the cost of the necessaries of 
life, or, if this were not possible, the public should be brought 
to understand that the prevailing high prices were inevitable. 

1 Industrial Unrest in Great Britain, U. S. Department of Labor Statistics, 
Bulletin No. 237, p. 15. 

2 Ibid., p. 77. 

^ E. Cannan: "Industrial Unrest," The Economic Journal, December, 1917, p. 
461. 



I02 PRICES AND PRICE CONTROL DURING THE WAR 

The South Wales panel proposed among other things that the 
government should stamp out all profiteering in food, and fix 
the prices to be charged by the wholesaler, the middleman 
and the retailer. 

To meet these recommendations and thus to restore to a 
certain extent domestic tranquillity,^ all the essential food- 
stuffs have been gradually brought under control, i.e., bread 
and flour, meat, potatoes, sugar, tea, milk, butter, cheese and 
bacon. Control has also been extended to certain subsidiary 
foods such as jam, oatmeal, dried peas and beans, chocolate 
and sweetmeats, and also to feeding stuffs for live stock. 

Prices are being fixed at every stage of production and dis- 
tribution of controlled commodities, from the stockyard or 
barn to the shop counter. The speculative middleman has 
been eliminated, and the charges that may be made by the 
necessary middleman and the retailer are being defined and 
regulated by fixing prices or profits. ^ 

These measures did not bring the expected peace. Govern- 
ment methods of controlling the food situation were criticized 
severely at the Labor congress held during the latter part of 
December, 191 7. 

Speaking to a resolution on this subject, Robert Smillie, 
leader of the miners, said : 

1 hope the government will take it that we put this forward as a grave warning 
to them. If they do not carry out at once the spirit of the resolution they may take 
it for granted that the workers of the country are no longer going to stand having 
their wives and children waiting outside shop doors, almost begging for food to 
be sold to them. 

Dr. Marion Phillips, of the executive committee of the 
Women's Labor League, said that unless steps were taken to 
improve present conditions infant mortality would rise to a 
degree which never had been known. 

The whole policy of the government, declared Bevan of the 
dock workers' union, had been to "play into the hands of the 
American ring. Talk of food control — there will soon be 
nothing left to control," he said. 

' The Statist, December i, 19 17, p. 1120. 

2 Labour Gazette, November, 191 7, p. 398. 



GREAT BRITAIN IO3 

Resolutions strongly favoring compulsory rationing for 
all Britain were adopted unanimously by the National Trades 
Union convention and the congress of the Labor party and 
war emergency workers. 

The working men protested that suffering would result and 
was resulting from inequitable distribution of foodstuffs 
through the present voluntary rationing scheme.' 

^ Chicago Tribune, December 30, 19 17. 



CHAPTER VII 

Governmental Control and Price Fixing 

Food 

General 

After the declaration of war there was a sudden and rapid 
rise in prices of necessaries, particularly of foodstuffs. The 
reasons for this rise may be summarized as follows: 

(i) With the mobilization of the -British army and navy 
large governmental orders had to be immediately filled.^ 

(2) Many householders with cash at their command 
rushed to the stores and began laying in supplies for weeks, 
sometimes for months in advance of their actual needs.- In 
smaller places shops were literally bought out by one or two 
purchasers. This "frenzied" buying was due to fear that the 
existing stocks in stores would become exhausted and that 
prices would rise abnormally high. 

Some dealers took advantage of conditions to realize as 
much as possible on the merchandise which they had on hand. 

The situation was aggravated by a temporary disorganiza- 
tion of shipping and by the use of railway facilities for war 
purposes; this made it difficult for dealers to get new supplies 
in order to keep up stocks. Poorer classes of the population 
who could purchase only from day to day as they needed 
the commodity were thus placed in an extremely difficult 
position. 

That the rise in prices was due largely to a panic and that it 
was not warranted by the conditions existent at the time, is 
apparent from the fact that the English and Scottish coop- 
erative wholesale societies after a study of the situation sent 
out reassuring messages to all their local store committees; 
they advised them not to raise prices, but to restrict sales to 

1 The Statist, August 22, 19 14, p. 466. 

^ Labour Gazette (Canadian), May, 1917, p. 392. , 

104 



GREAT BRITAIN IO5 

individuals in accordance with their previous average rate of 
purchases.' 

After the most urgent needs of the government, as well as 
the demands of selfish, thoughtless or overprudent private 
buyers were satisfied, prices receded from their high levels. 
It was soon recognized that there was enough food in stock 
or in store for some time to come. As the result of special 
inquiries, the government announced that the supplies of 
wheat then in the country were sufficient to meet the normal 
consumption for five months, the supplies of potatoes for 
nearly twelve months. The government also allayed the 
fears of the submarine menace. ^ 

In commenting on the situation, the Statist stated that "pro- 
vided always that the British fleet retains command of the 
seas and therewith our trade routes . . . the outlook is 
rather for a gradual trend to lower prices for provisions than 
to any appreciable rise."^ No reasons were given for the 
statement ; one wonders whether this prognostication was not 
based upon the thought that the withdrawal of the Central 
Powers as buyers from the world's markets would reduce the 
demand and thus lower prices.^ 

When the panic was at its height, the government, in re- 
sponse to an urgent demand for some immediate action, made 
an interesting attempt to influence prices without taking upon 
itself the responsibility of fixing them. 

On August 5, 1914, a Cabinet committee on food supplies, 
under the chairmanship of the Home Secretary, met "the 
representatives of certain great companies owning 3,000 
distributing shops and grocers' federation owning 14,000 
shops. "^ It was decided that a standing committee should be 
formed to advise as to maximum retail prices for staple articles 
of food. These prices were not compulsory, but represented 

^American Review of Reviews, May, 1916, p. 576. 

'^ H. S.: "Early Phases of Food Control," The Edinburgh Review, January, 
1918, p. 108. 

^ The Statist, August 22, 1914, p. 466. 

^ F. Eulenburg: " Die Bewegung der Warenpreise wahrend des Krieges," Welt- 
wirtschaftliches Archiv, 6 Band (19 15 II), pp. 172-173. 

^London Morning Post, August 6, 1914. 



er 


State Maximum, per 




Pound 






s. d. 






o 4i ( 9.1 cents) 




05 (10. 1 " 






I 6 (36.5 " 






9HI9-3 " 






8 (16.2 " 






10 (20.3 " 




) 


I 6 (36.5 " 
I 4 (32.4 " 





106 PRICES AND PRICE CONTROL DURING THE WAR 

the Opinion of experts, acting under governmental sanction, 
as to what purchasers might reasonably regard as the highest 
figures they ought to pay. The first list of prices was issued 
August 7, to be effective through the loth. These prices 
gave rise to complaint that the committee was acting in the 
interest of dealers rather than of purchasers. 

The following were the home and colonial quotations and 
the state maximum compared for August 7, 19 14:' 

Today's Price, per 
Articles Pound 

s. d. 

Granulated sugar 03 (6.1 cents 

Lump sugar o 3I ( 7.1 

Butter 13 (30.4 

Cheese (colonial) o 8| (17.2 

Lard (American) 0.7 (14.2 

Margarin 08 (16.2 

Bacon: 

British (by the side) ._ 12 (28.4 

Continental (by the side) 

By the time the next list was issued on August 1 1 current 
prices had risen somewhat, and the maximum set on bacon 
by the committee was reduced by 3d. (6.1 cents) for British 
and 2d. (4.1 cents) for continental bacon. ^ Accordingly, the 
current and maximum prices agreed, except that the commit- 
tee's price for sugar was still |d. (1.5 cents) higher than cur- 
rent quotations. The committee continued to issue price 
lists for about three weeks, by which time prices had become 
fairly stable, though at a higher level than that prevailing in 
July.^ The issue of price lists for meat was resumed early in 
1915.^ 

On August 10, 1 914, the presidents of the Board of Trade 
and the Board of Agriculture and Fisheries met a number of 
representative millers to discuss the price of flour, and it was 
arranged to have a standing committee of the millers to con- 
fer with the government from time to time.^ A conference 
was also held with representatives of the Meat Traders' 

1 The Daily Citizen, Saturday, August 8, 1914. 

2 Labour Gazette, August, 1914, p. 283. 

3 U. S. Bureau of Labor Statistics, Bulletin No. 170, pp. 12-13. 
^Labour Gazette (Canadian), May, 1917, p. 396. 

* Board of Trade Journal, August 13, 1914, p. 419. 



GREAT BRITAIN IO7 

Association. The prices of flour were fixed August 17, 1914, 
by an agreement between the President of the Board of Trade 
and the millers' committeeJ 

A weapon to protect the public from hoarding and from cor- 
ners in foodstuffs was provided by the passage on August 10, 
1914, of the "Unreasonable Withholding of Food Supplies 
Act" (4 and 5 Geo. V, ch. 51). The act was repealed by 
the Articles of Commerce Act, which became law on August 
28, 1914 (4 and 5 Geo. V, ch. 65). This latter act, similar in 
nature to the first one, authorized the Board of Trade, if 
authorized by proclamation, to take possession of any articles 
of commerce unreasonably withheld, upon payment of a 
reasonable price determined by agreement with the owners 
or by the arbitration of a judge selected by the Lord Chief 
Justice. By a proclamation of September 17, 1914 (No. 1403) 
the Board of Trade was given authority to exercise the power 
described in this act with respect to "any article of com- 
merce." In Jersey the power to take possession of articles 
under this act was exercised by the Defense Committee, and 
persons authorized by them {Board of Trade Journal, Octo- 
ber 15, 1914, p. 162). 

It does not appear that the power granted by this act has 
ever been specifically exercised. Complaints having been 
made at one time concerning the rise in the price of wheat 
and flour, the Board of Agriculture and Fisheries declared 
that there had been no improper withholding of supplies. ^ 

Among other steps taken by the government on the out- 
break of the war was the setting up of a Cabinet Committee 
on Food Supplies. Returns of stocks of all foodstuffs in the 
country were obtained, and arrangements made for the 
periodical collection of this information. Soon after the out- 
break of the war export of foods was prohibited except under 
license. A similar action was taken a couple of months later 
with regard to feeding stuffs for animals. 

For the purpose of maintaining the country's food supply, 

1 Board of Trade Journal, August 20, 19 14, p. 485. 
"^ Ibid., January 14, 1915, p. 100. 



I08 PRICES AND PRICE CONTROL DURING THE WAR 

a plan for state insurance of ships and cargoes was hastily 
devised and adopted. ^ In the case of ships the government 
was to insure all war risks at a flat rate of premium ranging 
from I to 5 per cent. For cargoes a special insurance depart- 
ment was set up with an advisory board to fix the rate of 
premiums. 

Among the other early steps taken by the government in 
connection with the control of food were the appointment of 
the Royal Sugar Commission and the establishment of agen- 
cies entrusted with the purchase, shipment, storage and dis- 
tribution of meat, wheat and flour. Excepting these measures, 
the government, during the first two years of war, followed 
largely the plan of not interfering with production, distribu- 
tion and prices of foods. Toward the end of 191 6 the poor 
harvests in North America, South America and Europe, the 
increasing shortage of tonnage due to commandeering by the 
government and losses by submarines, the growing discontent 
of the people with what they considered governmental neg- 
ligence, the rapidly expanding indebtedness and the necessity 
to pay high prices for all that the government was buying, 
the inability to forecast how long the war would last and the 
certainty that if it lasted much longer Great Britain would 
experience great difficulties in bringing food into the country, 
all influenced the government to change its policy for that of 
strict measures of control. 

Accordingly, on November 16, December 5 and December 
22, 1916, Orders in Council were issued which amended, with 
this aim in view, the regulations (called the Defense of the 
Realm Consolidation Regulations, 19 14) under the Defense 
of the Realm Consolidating Act, 1914. These orders gave the 
Board of Trade wide powers to control any "articles of com- 
merce, the maintenance of which is important as being part 
of the food supplies of the country, or as being necessary for 
the wants of the public."- The Board of Trade's orders, 

1 U. S. Bureau of Labor Statistics, Bulletin No. 170, p. 14. 

2 Monthly Review of the U. S. Bureau of Labor Statistics, March, 191 7, p. 397; 
see also Board of Trade Journal, November 23, 1916, pp. 566-570; December 14, 
1916, pp. 795-796, and December 28, 1916, p. 945. 



GREAT BRITAIN IO9 

under the regulations, "may be made either so as to apply 
generally or so as to apply to any special locality or so as to 
apply to any special supplies of any article, or to any special 
producer, manufacturer or dealer." The orders provided 
that "a. person shall not (subject to any exceptions contained 
in the order applying this provision) directly or indirectly sell 
or offer for sale any article to which this provision is applied 
at a price exceeding by more than the amount named in the 
order the corresponding price of the article at a date specified 
in the order" (the corresponding price to be settled, in case 
of difference, by the Board of Trade). It gave the Board of 
Trade the power to requisition supplies, to request informa- 
tion as to stocks, to hold inquiries, etc. The only price- 
fixing orders issued by the Board of Trade directly were 
two orders regulating the price of milk. 

The Board of Trade Journal of December 14, 1916, speaks 
of the appointment of Lord Davenport as Food Controller. 
Upon him fell the responsibility of administering the new 
regulations adopted for the purpose of controlling supplies 
and prices of food. For a short time after his appointment 
the Food Controller was dependent upon the Board of Trade 
for the issuance of orders; he lacked the necessary authority, 
arrangements not having been completed for the transfer to 
him of the powers of the Board of Trade. This was done 
on December 22, 1916, when the New Ministries and Sec- 
retaries Act (6 and 7 Geo. V, ch. 687) was passed.^ The 
act authorized the King for the purpose of economizing and 
maintaining the food supply of the country to appoint a 
Food Controller, the latter to "hold ofiice during His Majesty's 
pleasure." 

Upon the Food Controller has been placed the duty to 
regulate the supply and consumption of food as well as to 
encourage its production. 

In accordance with this act certain of the Defense of the 
Realm (Consolidation) Regulations which were issued at the 
outbreak of the war were so amended as to confer on the Food 

1 Monthly Review of the U. S. Bureau of Labor Statistics, March, 1917, p. 398. 



no PRICES AND PRICE CONTROL DURING THE WAR 

Controller some of the powers which heretofore were vested 
in the Board of Trade. The new regulations give the Con- 
troller large discretionary powers with respect to the issue of 
orders regulating the production, manufacture, treatment, 
storage, distribution, supply, sale or purchase of any article 
(including orders as to maximum and minimum prices). 

The Food Controller may take over from private possession 
any goods on such terms as he may direct, where it appears 
to him necessary or expedient to do so. He also can demand 
information from every holder of stocks of goods as to the 
amount held, price paid or received, cost of production, etc. 
He may establish control over any food producing factory or 
workshop; the occupiers of every such factory must then 
comply with his directions as to the management and use of 
premises. He is given power, in conjunction with the Board 
of Agriculture, to take possession of any land improperly 
cultivated and take any machinery or farm stocks which may 
be required for the better cultivation of such land.^ 

The amended Defense of Realm regulations confer upon 
the Board of Trade powers similar to those exercised by the 
Food Controller regarding any articles to which the latter's 
powers do not extend. 

The first work undertaken by the Food Controller was to 
take a census of the stock of food on hand and to estimate 
the visible supply of important commodities. ^ 

It is difficult to see from subsequent orders of the Food 
Controller of what benefit to the Administration was this 
preliminary step, so essential In any comprehensive scheme of 
price fixing. There does not seem to have been any definite 
rule of conduct, any thought out plan of action in what Lord 
Davenport did during his tenure of office in the first part 
of 191 7. Order after order was promulgated, only to be 
amended and hastily reamended, without serious considera- 
tion of the problems involved. In Lord Davenport's defense, 

1 Defense of the Realm Manual (4th Enlarged Edition), May 31, 1917, Regula- 
tions 2F to 2J. 

2 British and Canadian Food Regulation, 65th Cong., ist Sess., Senate Doc. No. 
47, P- 17. 



GREAT BRITAIN III 

one may say that the office of the Food Controller was created 
at a time of intense agitation, when the nation was clamoring 
for immediate action, when on all sides were heard accusations 
that the government had been playing into the hands of the 
rich, of the "profiteers," to the utter disregard of the inter- 
ests of the great mass of common people. 

Lord Davenport resigned because of ill health in the latter 
part of May, 191 7, and Lord Rhondda was appointed Food 
Controller in his stead. Whatever may be one's opinions 
regarding price fixing, one must admit that Lord Rhondda's 
handling of the problem from the very first day of his appoint- 
ment was much more careful, thorough and systematic than 
that of his predecessor. His idea was to fix prices of those 
articles of prime necessity over the supply of which he could 
obtain effective control at all stages from the producer down 
to the retailer; in this determination of prices he followed as 
far as possible the principle of allowing a reasonable prewar 
profit for those engaged in the production and distribution.'- 
Issuing one order after another. Lord Rhondda gradually 
tightened his grip on business, and established a far reaching 
and rigid supervision of all food articles; the work of man- 
ufacturers and merchants became regulated, maximum prices 
were established and for certain products (sugar, meat) ra- 
tioning cards were issued. A statement which Lord Rhondda 
gave out in December, 191 7, offers a concise outline of the 
system he adopted for Great Britain. ^ 

According to this statement, the framework of the British 
machinery of control is formed in the civil service. They are 
the administrators, but in all cases the Food Controller secures 
the best available business men to advise them, as well as a 
►number of expert committees dealing with almost every food 
commodity. 

A Costing Department, under the direction of chartered 
accountants, has been set up, through which the profits made 

1 The Liberal Magazine, August, 1917, p. 301; see also The Economist, July 28, 
1917, pp. 115-116. 

2 Monthly Review of the U. S. Bureau of Labor Statistics, December, 1917, pp. 
lOO-IOI. 



112 PRICES AND PRICE CONTROL DURING THE WAR 

by any manufacturer or retailer of food can be ascertained. 
The country has been divided into separate areas, in each of 
which a responsible firm of accountants has been appointed by 
this department to do the necessary work. Reasonable profit 
based on prewar rates is added to the present cost and price 
limits agreed on that basis, after consultation with the repre- 
sentatives of the trades concerned. 

Decentralization is obtained by dividing Great Britain into 
sixteen food divisions, consisting of so many counties. Each 
division is under the superintendence of a commissioner ap- 
pointed by the Food Controller. In each of these divisions 
the borough, urban or rural district councils, or other local 
authorities, appoint local food committees, with limited 
powers and certain discretion, to carry out such regulations 
as regards price and distribution as may be issued from 
headquarters. 

Local tradesmen are registered with their local committees, 
and if any tradesman does not carry out regulations and orders 
he may be struck off the register and prevented from further 
trading. The various orders fixing or amending the maximum 
prices of meat, milk, potatoes, bread, etc., are communicated to 
the local committees and the trades and the public are informed 
through the daily and trades press. A staff of inspectors is 
kept at headquarters and a number of sentences have been 
imposed by magistrates throughout the country for contra- 
vention of the regulations. The general penalty is a fine not 
exceeding £ioo or a term of six months' imprisonment with 
or without hard labor, or both. This punishment may be 
inflicted according to the oftense. 

Lord Rhondda made also arrangements as rapidly as pos- 
sible for securing control of all imports of foodstuffs in coop- 
eration with the American and Canadian food controllers.^ 

An Order in Council, dated June 28, amended the Defense 
of the Realm Regulations. Among other amendments, it 
conferred on the Food Controller the same powers as were 

^ H. S.: "Early Phases of Food Control," The Edinburgh Review, January, 1918, 
p. 120. 



GREAT BRITAIN II 3 

previously granted to the Admiralty, Army Council and Minis- 
try of Munitions regarding the requisitioning of goods and the 
controlling of prices. This amendment gave Lord Rhondda 
the authority to requisition the whole or part of the output of 
any factory and to pay a price based on the cost of production, 
with an addition of a prewar rate of profit, without regard to 
the price ruling on the market. Similar powers have been 
given for dealing with growers or other producers. Where 
goods are requisitioned from a bona fide merchant or dealer, 
the price is determined by the price paid by him for the goods, 
provided that such price is not unreasonable, and by the rate 
of profit which he would normally earn under prewar condi- 
tions, provided that such profit is not excessive.' 

Lord Rhondda's decentralization scheme led to the passage, 
on August 22, 191 7, of the Food Control Committees Order, 
1 91 7 (No. 869).- This order requested local authorities to 
appoint food control committees, whose functions would be 
to administer a new scheme of sugar distribution, to continue 
the campaign for food economy, to deal with other food sup- 
plies such as bread and meat, and to assume special respon- 
sibilities with regard to food prices. The appointment of 
food control committees was a step towards decentralization, 
preparatory to the fixing of a general scale of prices on many 
necessary foodstuffs. The committees were entrusted with the 
enforcement of this scale; they were also asked to advise on 
any modification of it that may be shown to be necessary 
in their districts. 

Food control committees thus constituted consist of not 
more than twelve members each; each committee must in- 
clude at least one woman and one representative of Labor. 
A food control committee may appoint subcommittees, con- 
sisting wholly or partly of the members of the committee, and 
may delegate to the subcommittee, so far as the Food Con- 
troller may direct, any of its powers and duties. 

From a survey of the orders issued by the Food Controller 

1 Board of Trade Journal, July 5, 1917, p. 17. 

^ Monthly Review of U. S. Bureau of Labor Statistics, November, 1917, pp. 98- 
100; see also Labour Gazette, August, 1917, p. 276. 



114 PRICES AND PRICE CONTROL DURING THE WAR 

it appears that at the beginning of 191 8 all the principal food- 
stuffs — bread, meat, milk, butter, cheese, potatoes, sugar, 
tea and bacon — have been brought under control, while fixed 
prices also rule in regard to many articles of secondary im- 
portance, such as dried peas, beans, rice, sago, tapioca, oat- 
meal, jam, sweetmeats and chocolate.^ The consumption of 
meat, butter, margarin and sugar is controlled by cards. 
The consumer must select his retailer and the latter receives 
supplies for distribution according to the number of his 
customers. 

Sugar 

The only foodstuff the supply and distribution of which the 
government undertook to control from the earliest stages of 
the war was sugar. The reason for this action was the sudden 
discontinuance of imports which in normal times came largely 
from Germany and other European countries. On Septem- 
ber II, 1914, a Royal commission was appointed to "purchase, 
sell and control the delivery of sugar on behalf of His Majes- 
ty's government" and generally to take such steps as would 
be necessary for the purpose of maintaining supplies. ^ One 
of the first things the government did was to buy up stocks 
all over the world, particularly in the East and West Indies.^ 
During the latter part of September and in October, the com- 
mission purchased by private negotiation over 900,000 tons 
of sugar, raw and refined. These large purchases were 
prompted by fear that sugar production on the continent 
of Europe would cease and that all countries would have to 
depend upon the cane sugar output. While the British Gov- 
ernment was buying, the price of sugar in the world's markets 
more than doubled; the price dropped again as soon as the 
commission withdrew from the market. The sugar was sold 
by the commission to refiners at a fixed price which protected 
the government from loss, at the same time making it possible 
to retail the sugar at 3fd. (7.6 cents) per pound for granulated 

1 The Statist, December i, 1917, p. 1120. 

2 Board of Trade Journal, September 24, 1914, p. 810. 
^Labour Gazette (Canadian), May, 1917, p. 396. 



GREAT BRITAIN 115 

sugar and4|d. (9.1 cents) for good cubes;'- the price of granu- 
lated sugar before the war was about 2|d. (5 cents). 

Having bought supplies at a higher price than that which 
subsequently ruled in the open market and being faced with 
a heavy loss on its transaction, the government passed on 
October 14, 1914, a law temporarily prohibiting all sugar 
imports into the British Isles. The whole procedure was de- 
nounced in many quarters as an ill devised speculation, the 
only tangible result of which was the compelling of British 
sugar users to pay higher prices than those that would have 
prevailed without governmental interference. Because of 
"McKenna's gamble in sugar," the consumers were cut off 
from the world's supplies, wrote the Spectator} The commis- 
sion acknowledged that there have been times, notably at 
the end of 1914, during which the price of sugar in outside 
markets has been quoted at rates below those at which the 
sugar was being placed on the British market, but, according 
to the commission's report, "at those times the quotations 
have usually been the result of transient influences (including 
often the commission's own absence from the market) and 
have been no true indication of what prices would have ruled 
under normal conditions. "^ Mr. Lay ton thinks that in view 
of the uncertainty at the outbreak of the war it is unreason- 
able to blame the government for having taken action. 
Events proved that beet sugar was available for consumption 
in Europe. If, however, the commission's fears were justified, 
England "might have been very hard hit."" The explana- 
tions offered are decidedly weak; they do not give any valid 
justification either for the hastiness of the commission's 
decision, unwarranted by facts, or for the clumsiness with 
which the decision was executed. 

The Royal commission's scheme of distributing sugar to 
wholesalers was based on the distribution of 191 5. In a 

1 U. S. Bureau of Labor Statistics, Bulletin No. 170, p. 14. 

2 The Spectator, January 13, 1915. 

' First (interim) report of the Royal Commission on the Sugar Supply, Cd. 
8728; quotation from Labour Gazette, October, 1917, p. 359- 

^W. T. Layton: "State Control of Prices and Production in Time of War," 
The Political Quarterly, May, 1915, pp. 82-83. 



Il6 PRICES AND PRICE CONTROL DURING THE WAR 

memorandum issued in January, 1917, the commission laid 
down that the British refiners should continue to issue sugar 
only to their 1915 customers, the quantities issued to be 
proportionate to those of 191 5, the proportion varying from 
time to time, in accordance with the general proportion which 
all available supplies bear to the total quantity used or dis- 
tributed in 1 91 5. The sugar commission was to continue to 
distribute sugar at its disposal to its 191 5 customers, giving 
each as his share of available sugar the amount proportionate 
to his total use or distribution in 1915, of all sugar other than 
the British refined. Wholesale dealers were instructed to 
distribute to their customers on the same principle, that is 
to say, to let each of their customers of the year 191 5 have 
his equivalent proportion of the available supplies.^ 

The commission's selling prices to wholesalers have been 
fixed with a view to earning returns which should do no more 
than cover all expenses of the commission and provide an 
adequate margin against contingencies. In connection with 
the control of retail prices the means possessed by the commis- 
sion have been only slight, but, according to the commission's 
report, they appear to have been generally effective up to the 
end of 191 6, though less adequate to the increased difficulties 
in the latter part of that year.- 

The plan thus adopted by the commission was to sell the 
sugar to grocers at a price much below that which would 
have prevailed in an unregulated market; the sugar was sold 
in the proportions in which the total was divided just before 
the war. The government insisted on the grocers selling sugar 
at retail prices corresponding to the wholesale prices charged 
by the government. 

The distribution was entirely out of date. There has been 
so much shifting in the population since the war that many 
parts of the country were receiving an excess supply of sugar, 
while other areas (munition plant districts, etc.) were under- 
served.'' In the early part of 1917, a joint committee, repre- 

1 Monthly Review of the U. S. Bureau of Labor Statistics, June, 1917, p. 936. 

^Labour Gazette, October, 1917, p. 359. 

* E. Cannan: "Industrial Unrest," Economic Journal, December, 1917, p. 936. 



GREAT BRITAIN II 7 

senting the Parliamentary Committee of the Cooperative 
Congress and the War Emergency Workers' National Com- 
mittee, submitted to the Food Controller a report in which 
they showed the inadequacy of the plan adopted by the gov- 
ernment for the purpose of insuring equable distribution of 
sugar. It was pointed out that the average increase in 
membership of the cooperative societies amounted to 2,291 
per society and that their available supplies of sugar in 191 5 
amounted to 3 pounds 5 ounces per member (or family of 
from 4 to 5 persons) per week; in 1916 the quantity was 
reduced to i pound 14 ounces for the same period, an amount 
considerably below that which the sugar commission professed 
to guarantee. It was also brought out in the report that no 
arrangements had been made to meet the increased demand in 
those places where there have been large additions of popu- 
lation.^ The attention of the Controller was drawn to the 
course adopted by some retail grocers of supplying sugar only 
to those persons who bought some other specific commodity. 
The public was finding these conditioned sales inconvenient, 
annoying and just as expensive as if the grocers were permitted 
to sell sugar for what it would fetch. The grocers' predica- 
ment consisted in that they had no workable guidance as to 
whom to sell and in what proportions. They knew that the 
rule "as in 1913" could not be applied; that selling in equal 
rations only to old customers meant refusal to sell to all 
newcomers." 

Since no definite rationing system was adopted, consumers 
did not see why retailers should not sell them whatever 
amount they asked for. This would have meant compulsory 
sales of supplies which were insufficient to go around, the 
serving of the first comers and letting the late comers go 
away empty handed. According to Professor Cannan, "the 
Davenport administration did not see much, but It did see 

1 The Christian Science Monitor (Boston), February i6, 1917; quoted from 
Monthly Review of U. S. Bureau of Labor Statistics, June, 1917, p. 936. 
^ Cannan: op. cit., p. 466. 



Il8 PRICES AND PRICE CONTROL DURING THE WAR 

this, and therefore refused to yield to the popular clamor for 
compulsory sale."' 

The Northwestern Commissioners in their part of the Re- 
port on Industrial Unrest state that if other necessaries of 
life are to be controlled and distributed as sugar has been 
controlled and distributed in the past the position would 
become exceedingly dangerous. ^ They consider that the real 
value of the experiment with sugar was to use it as an example 
of how not to do it. 

Three orders relating to sugar were issued by the Food 
Controller in February, 191 7. The Dealings in Sugar (Re- 
striction) Order, dated February 9, 191 7, prohibited private 
dealing in sugar outside of the United Kingdom. The two 
other orders considered brewers' sugar. ^ On March 16 
manufacturers were limited during the year 191 7 to the use 
of 40 per cent of the sugar used by them for manufacturing 
purposes during 191 5. The order applied to all articles ex- 
cept jam, marmalade and condensed milk.^ The shortage of 
sugar led to the issue of two new orders, one in April and the 
other in May. The April Order, for the purpose of releasing 
for domestic consumption sugar of a better quality, permitted 
manufacturers other than brewers to use brewers' sugar. ^ 
By the Sugar (Restriction) Order No. 3, 1917, the Food 
Controller has reduced the amount of sugar which could be 
used by the manufacturers from 40 per cent used by them in 
1915 to 25 per cent.'' 

Of special interest is the Food (Conditions of Sale) Order, 
191 7, which came into effect on March 23, 191 7.'' It con- 
tained a clause that "in the sale or proposed sale of any article 
of food, no person may impose or attempt to impose any 
condition involving the purchase of any other article." It 
was particularly directed against grocers who made the sale 

^ Cannan: op. cit., p. 467. 

^ Industrial Unrest in Great Britain, U. S. Bureau of Labor Statistics, No. 237, 

P- 45- 

3 Board of Trade Journal, February 15, 191 7, p. 484. 
^ Ibid., March 22, 1917, p. 770. 
^ Ihid., April 5, 1917, p. 18. 
^ Ibid., May 24, 191 7, p. 411. 
^ Ibid., March 29, 1917, p. 811. 



GREAT BRITAIN II 9 

of sugar conditioned upon other purchases, but it applied also 
to the sale of other articles of food. 

Passing over some of the minor orders, such as the Sugar 
(Domestic Preserving) Order, 1 91 7, one comes to the last impor- 
tant measure, the new sugar distribution scheme. The scheme 
is largely an adaptation of the plan proposed by the Commis- 
sion of Inquiry into Industrial Unrest (Northwestern Com- 
missioners). Under this plan, the sugar consumers must 
provide themselves with sugar registration cards, which they 
are free to deposit with any retailer they choose. After they 
have chosen the retailer they become tied to him, as the latter 
receives the allowance with regard to each card deposited 
with him and from no other grocer can any sugar be bought. 
Xhe retailers were forbidden to sell sugar after October i 
unless they held certificates of registration granted to them by 
their local Food Control Committee.' The card system began 
to be employed after January i, 1918. The scheme assures 
that cheap sugar, a gift of taxpayers to sugar consumers, will 
reach them, the taxpayers, as Professor Cannan puts it, hav- 
ing in addition to pay the cost of administering this somewhat 
indiscriminate charity."^ It was hoped that the scheme 
would do away with congestion in retail establishments and 
with long queues of people waiting for hours in front of a store. 

Milk 

Fresh milk was the first foodstuff against the raising of 
the price of which many British consumers as a whole, through 
municipalities, registered a vigorous protest. Fresh milk was 
always out of the reach of the very poor, those with a family 
income of 20s. a month having had to use condensed milk. 
The number of those who had to give up fresh milk gradually 
grew larger and larger, and it was the knowledge that the 
elimination of milk from the diet impairs the health of the 
children and thus injures the growing population of the 

^Labour Gazette, September, 1917, p. 318; see also The Economist, August 11, 
1917, p. 204; and Commerce Reports, October 15, 1917, p. 204. 
^Cannan: op. cit., p. 467. 



120 PRICES AND PRICE CONTROL DURING THE WAR 

country which prompted the government to revise its policy 
of non-interference with regard to the price fixing of foods. 

An Order in Council (No. 792) dated November 16, 191 6, 
gave the Board of Trade power to adopt special regulations 
for the maintenance of the food supply, including the power 
to fix prices.' Under this authority the Board of Trade an- 
nounced on November 23, 1 916, maximum and minimum prices 
for milk, sold in wholesale and in retail trade. ^ This order 
was amended by an order issued on December 12, 1917,^ 
under the authority of the Food Controller, to whom were 
transferred by the Order in Council of January, 191 7, the 
powers of the Board of Trade relating to the food supply. 
Under this new order, the price of milk was not to exceed by 
more than a specified amount the price in the corresponding 
month before the war. This amount was 2d. (4 cents) per 
quart for retail milk and from 5|d. (11 cents) to 6|d. (13 
cents) per imperial gallon for wholesale milk, the latter 
amount if milk was delivered on the premises of the buyer 
and these premises were not used as a creamery or factory. 
The maximum price for "accommodation" milk was raised 
to IS. 8d. (41 cents) per imperial gallon, inclusive of all charges 
for transport to the railway station at which delivery is taken 
by the purchaser.^ 

Contracts for the sale of milk made on or before Novem- 
ber 15, 1916, were allowed to remain valid for their full period 
(up to April I, 1 91 7) even if the price stipulated exceeded that 
otherwise permissible. 

This milk order was amended by the Price of Milk Order, 
191 7 (No. 68), dated January 26, 191 7. The general effect 
of the new order was to provide that the retail price of milk 
in any month should not exceed the retail price in the corre- 
sponding month in the twelve months ending March 31, 1914, 
by more than 2d. per imperial quart, subject to certain excep- 
tions.5 The Price of Milk Order (No. 2), 191 7 (Order No. 

^ Supra, p. 108. 

2 Board of Trade Journal, vol. 95, p. 570. 
^ Ibid., p. 861. 

* Monthly Review of the Bureau of Labor Statistics, March, 1917, p. 388. 
^Defense of the Realm Manual, 4th enlarged edition; May 31, 1917, pp. 305- 
309; see also Labour Gazette, February, 19 17. 



GREAT BRITAIN 121 

1 60), dated February 20, 191 7, varies from the previous milk 
orders with regard to wholesale prices J 

As some farmers seemed to have been under a misappre- 
hension regarding wholesale summer prices of milk, as fixed 
by the Milk Order No. 68, the Controller explained that 
the maximum price of milk in the summer of 191 7 was 
to be 6^d. per imperial gallon above the price which the 
farmer obtained in the summer of 191 3 for milk delivered at 
the premises of the buyer or at the railway station of the 
buyer, under a contract to supply a minimum quantity. In 
case of milk sold under other conditions, the farmer could not 
charge more than 5^d. per gallon above the price of the sum- 
mer of 1 91 3. Any one charging or asking a price higher than 
the maximum fixed was guilty of a summary offense. ^ 

That the government itself recognized the impracticability 
and inexpediency of maximum prices for milk and that it 
feared the effect of such rigid prices upon production may be 
seen from the fact that shortly after the promulgation of the 
last two orders the President of the Board of Agriculture 
and the Secretary for Scotland conferred with the Food 
Controller and agreed to the following statement : 

The prices to be fixed for next winter will be considered by the agricultural 
departments in good time before the period for making contracts arrives, so as to 
make the maintenance of milk production certain and commercially profitable in 
comparison with other branches of the farming industry.^ 

The haste with which the orders were issued is evidenced 
from the Food Controller's announcement soon after the 
orders were promulgated that he would issue an amendment 
^ basing the increase in prices of milk on the summer prices of 
1 9 14 instead of those of 1913.^ The Board of Trade Journal 
for April 5, 191 7, contains a notice that at the request of 
the President of the Board of Agriculture and the Secretary 
for Scotland the Food Controller amended the Price of 
Milk Order, so as to allow winter contracts which under that 

1 Labour Gazette, March, 1917. 

^ Monthly Review of the U. S. Bureau of Labor Statistics, June, 19 1 7, p. 939; sae 
also Board of Trade Journal, March 15, 1917, p. 730. 
3 Ibid., p. 939. 
* Board of Trade Journal, March 29, 1917, p. 811. 



122 PRICES AND PRICE CONTROL DURING THE WAR 

order were terminated on March 31 to run to April 30, and 
also to allow the prices chargeable in April, 191 7, to be cal- 
culated with reference to the prices prevailing in March, 
1914.' The inclusion of April in the winter months of 1916- 
17 was found necessary because of weather. A couple of 
weeks later the Food Controller gave notice that unless prices 
of feeding stuffs were substantially reduced, the winter con- 
tract prices for milk in 1917-18 will be not less than is. 8d. 
per gallon. 2 

On September 7, 191 7, the Milk (Prices) Order was issued, 
which fixed maximum winter prices to the producer as follows: 
October, is. 5d. per imperial gallon; November, is. 7^d., and 
December, January, February, March, is. 9d., with the addi- 
tion in each case of the actual cost of railway carriage for 
delivery to the railway station of the purchaser. The retail 
prices were limited to 2s. per imperial gallon in October, 191 7, 
and to 2s. 4d. per imperial gallon thereafter until the end of 
March, 1918. An addition of id. per quart was permitted 
for milk delivered in bottles to the consumers, making the 
retail price of milk 7d. per quart in October and 8d. in the 
five following months.^ 

The consumers of milk were informed that the above prices 
were justified because of increased cost of production and dis- 
tribution and that unless prices based on increased costs are 
paid the continuity of supply can not be insured. 

The prices do not represent any reduction on the maximum 
prices of the preceding order, as the government in the spring 
of 191 7 pledged itself not only not to reduce the price of milk 
but to allow an increase in order to secure the maintenance of 
dairy herds at full strength. The local food control commit- 
tees were given powers to take measures for the proper dis- 
tribution of milk. To safeguard the interests of the poor 
2,200 tons, equal to 4,000,000 gallons, of whole milk w^ere 
furnished to medical officers of health and to institutions. 

1 Board of Trade Journal, April 5, 1917, p. 19. 

2 Ibid., April 19, 1917, p. 113. 

^ Ibid., September 13, 1917, p. 561. 



GREAT BRITAIN I23 

Further, local committees were authorized to provide for an 
adequate supply at reduced prices to infants and invalids.' 

Potatoes 

The first order regulating the price of potatoes was issued 
on January 9, 1917, by the Food Controller, after consulta- 
tion with the Agricultural Departments of Great Britain and 
Ireland. It was to apply to the 191 7 crop and fixed the 
prices as follows : 

Potatoes in not less than 6-ton lots, f. o. b. 

115 s. ($27.98) per ton for delivery from September 15 to January 31 ; 
120 s. ($29.26) per ton for delivery in February and March; 
130 s. ($31.63) per ton for the remainder of the season.^ 

The price of potatoes in June, 1916, was 245s. ($59.61) as 
compared with 87s. 6d. ($21.29) in June, 19 14. At the time 
of the issuance of the order the government intended the 
prices to be contract or maximum ones. They were for 
produce of the first quality, delivered as required, in sound 
marketable condition. Previous to the issuance of this order 
the Board of Trade, under date of November, 191 6, brought 
out an order requiring a return of stocks of potatoes in Great 
Britain. 3 Two orders (one for Great Britain, the other for 
Ireland) were also promulgated for the purpose of safe- 
guarding the supply of seed potatoes for 1918 year's crop.^ 
On December 21, 1916, the Board oj Trade Journal announced 
that arrangements had been made to finance a scheme for 
the distribution of seed potatoes. The President of the Board 
of Trade has invited the war agriculture committees to re- 
quest borough, urban and parish councils to ascertain what 
quantity of seed potatoes is required in each village, to collect 
cash with orders and to distribute seed. In a debate which 
took place in the House of Commons soon after the issuance 
of the price fixing order, Mr. Curdy asked whether the prices 
fixed were maximum or minimum prices and whether the 
government, since it fixed prices for wheat and for oats, 

1 The Statist, December 17, 19 17, p. 120. 

2 Monthly Review of the U. S. Bureau of Labor Statistics, March, 1918, p. 402. 
^ Board of Trade Journal, December 21, 1916, pp. 861-863. 

* Ibid., p. 863. 



124 PRICES AND PRICE CONTROL DURING THE WAR 

proposes also to fix them for artificial manures and fertilizers. 
In his reply, Bonar Law said that the prices in the order were 
maximum.'- Mr. Lough thought that a great deal of harm 
has been done by the order; many farmers, according to him, 
were prevented from planting any potatoes; this was sure to 
lead to a tremendous diminution of the crop.^ The President 
of the Board of Agriculture replied that it was the govern- 
ment's object to discourage the growth of potatoes. It is diffi- 
cult to see why the Board of Agriculture should have desired 
to curtail the potato crop, which in 191 6, because of military 
drain on farm labor, the falling off In the acreage planted, in- 
creased cost of production and bad weather when the crop 
was ready for digging, fell from 7,476,458 tons In 1914 and 
7,540,240 tons in 1915 to 5,468,881 tons. That this was surely 
not the aim may be seen from the announcement of the Under- 
secretary of the Board of Agriculture on the next day that the 
price was to be taken as minimum. In corroboration of this 
announcement, the Food Controller stated on January 25, 
191 7, that the prices fixed for potatoes of the 191 7 main crop 
had been further considered and that In view of a possibility 
of an unfavorable season It had been decided that the prices 
named for potatoes "shall not be regarded as contract prices 
but as minimum prices guaranteed by the government for 
potatoes of the first quality."^ 

Thus the pressure of public and agricultural opinion com- 
pelled the government to revise Its hastily conceived plans 
and declare that it did not Intend to compel the farmer to 

1 Parliamentary Debates, House of Commons, 191 7, vol. xc, p. 26. 

- Ibid., p. 61. The cost of growing an acre of potatoes on good land was calcu- 
lated at that time to be: 

Seed £15 per acre 

Manure 10 per acre 

Rent rates 3 per acre 

Labor (plowing, cultivation) 9 per acre 

Lifting of the crop 3 per acre 

£40 per acre 

According to this calculation the grower on the basis of two years' average crop 

(five tons per acre) would have expended £40 per acre, for which he would have 

received £30. W. W. Berry: "Food Control and Hasty Decisions," Contemporary 

Review, February, 19 17, p. 186. 

^ Board of Trade Journal, January 25, 1917, p. 264. 



GREAT BRITAIN 125 

sell his potatoes for £5.153 a ton, but that this price was a 
guaranteed price to him. Nothing was to prevent him from 
selling to other buyers if by doing so he could obtain better 
terms with regard to the unsold portion of the 191 6 crop. 
The Seed Potatoes (Growers' Prices) Order, 1917, dated Janu- 
ary 19, 1917,^ gave a long schedule of maximum prices for seed 
potatoes, according to the variety and quality of potatoes. 
The price was fixed at £12 a ton for choice early varieties. ^ 
This was followed on February i, 191 7, by the Potatoes, 
1916, Main Crop (Prices) Order, 1917, which fixed maximum 
prices for the best table potatoes of the 191 6 crop if sold by 
the grower, as follows :^ 

For delivery in February, 1917 £8 a ton 

For delivery in March or April, 1917 £9 a ton 

For delivery in May or June, 1917 £10 a ton 

The order provided that except under the authority of the 
Food Controller no table potatoes of the 191 6 crop may be 
sola after February 19, 191 7, by or on behalf of any person 
not the grower, at a price exceeding i|d. a pound, such price 
including all charges for delivery to the buyer and for bags 
or other packages. 

The growers' prices current in 191 6 were from £12 to £20 
per ton for seed potatoes and £10 to £12 per ton for table 
potatoes. Since a substantially reduced price was likely to 
lead to greatly increased demand, Lord Davenport was asked 
"how [he] was going to insure a sufficiency of potatoes to last 
until next crop comes into the market?" 

The order of February i was obviously issued in part to 
protect the consumer from what was considered extortionate 
prices for potatoes. Within a few weeks Scotland, which was 
in a worse position than England in regard to its potato 
supply, appealed to the Controller to be excluded from the 
operation of the order; at the same time English retailers 
became more and more uneasy. The crop was a bad one, 

^ Statutory Rules and Orders, 1917, No. 50. 

2 Ibid., No. 89; see also Monthly Review of the U. S. Bureau of Labor Statistics, 
June, 1917, p. 933. 

^ Berry, op. cit., p. 185. 



126 PRICES AND PRICE CONTROL DURING THE WAR 

stocks were running short and it was argued that the lowering 
of prices by increasing consumption would only result in 
more trouble. Wholesale merchants complained that the 
farmers were holding their potatoes for better prices later on 
and that, although the growers' price was £8 per ton ($38.93), 
as much as £3 or £4 ($14.60 or $19.47) was charged for carting 
and other incidental expenses.' 

Wholesale prices were not restricted by the order, and 
wholesalers were thus free to make what profit they could. 
Retailers, therefore, in their turn, complained that while 
they were ordered to sell at a maximum price i§d. per pound, 
which amounted to £14 per ton, they had to pay whole- 
sale merchants from £14 to £15. The retailers maintained 
that unless they could buy at £10 los., they would refuse to 
handle potatoes. In his reply to retailers, the Food Controller 
stated that he did not think any action on his part would be 
necessary; the margin between growers' and retail prices was 
ample to allow a reasonable profit both to wholesalers and to 
retailers, who should arrange the matter among themselves. ^ 
There was no improvement in the situation, and the matter was 
brought to a head when the Lord Mayor of Manchester sent 
a telegram to the Prime Minister, representing the possibility 
of an immediate potato famine in Manchester and the sur- 
rounding district, and requesting that the subject be brought 
before the War Cabinet. He proposed that the order be so 
amended as to make it compulsory on growers to release 
stocks on demand. In reply to this message the Prime Min- 
ister announced on February 17 that inasmuch as the recent 
prolonged frost had reduced the available stocks and inter- 
rupted their regular distribution, it had been found necessary 
to readjust as fairly as possible the interests of all parties. 

1 Monthly Review of the U. S. Bureau of Labor Statistics, June, 191 7> P- 933- 
Just the reverse happened from what was predicted by some writers. "How," 
asked Mr. Berry, "is the Food Controller to decide which farmers are to have their 
crops taken off their hands in September, and which are to be compelled to hold 
their potatoes until Mayor June. It is obviously better business to receive £5 15s. 
in September than to wait for the price established for late deliveries." Berry, 
op. cit., p. 185. 

2 Monthly Review of the U. S. Bureau of Labor Statistics, June, 1917, p. 933. 



GREAT BRITAIN 127 

At the Minister's request the departments concerned conferred 
with representatives of the wholesale and retail trades (which 
they should have done before) and submitted certain propo- 
sals, which were approved by the War Cabinet. According- 
to the Prime Minister's announcement, 

the price which the growers will be entitled to charge to dealers and merchants for 
potatoes after the present date, February 17, up to March 31 will be £9 per ton, 
free on rail or free on board. After that the corresponding price will be £10. 
The price at which the growers or any other person may sell to the retailer will be 
£10 IDS. until March 31, and £11 ids. thereafter, in addition to the cost of carriage. 
The price which the retailer may charge will be i5d. per pound up to March 31, 
and ifd. per pound thereafter to the end of June.^ 

In conformity with this announcement, on February 24 
an amending order was issued by the Food Controller, which 
contained the maximum prices announced by the Prime 
Minister, The new prices were not to affect existing con- 
tracts. ^ 

A grower, according to the interpretation placed on the 
order by the Food Controller, was allowed to charge after 
March 31 the maximum price of ifd. per pound if he was 
selling potatoes in the ordinary way of business, by means of 
retail sales. ^ 

Many amendments were issued in connection with the 
regulation of seed potato prices. In the latter part of Feb- 
ruary, prices were fixed for the sale by any person other than 
the grower at 3d. per pound, if sold in quantities of one-half 
hundredweight or less. In case of sale in larger amounts the 
prices were those charged by the grower, plus cost of transpor- 
tation, and £2 and los. per ton if the sale were- over one-half 
hundredweight, but less than 10 hundredweight; £1 and 5s. per 
ton if the sale were over 10 hundredweight, but less than 4 
tons, and £1 per ton if the sale were 4 tons or over.^ The 
Seed Potatoes (Prices) Order (No. 2) 191 7, dated April 3, 
extended the provisions relating to seed potatoes to the end of 

^ Board of Trade Journal, February 22, 1917, p. 552. 

^ Ibid., March i, 1917, p. 613; see also Potatoes, 1916 Main Crop (Prices) Order 
No. 2, 1917, dated February 24, 1917. Statutory Rules and Orders, No. 178. 
^ Board of Trade Journal, April 5, 191 7, p. 18. 
^ Ibid., March i, 1917, p. 613. 



128 PRICES AND PRICE CONTROL DURING THE WAR 

April, as well as raised by £2 per ton the prices chargeable for 
seed potatoes.^ An amendment, dated April 30, 191 7, ex- 
tended until June i, 1917, the orders regulating the prices at 
which seed potatoes might be sold.^ 

A measure of far reaching consequence was that guarantee- 
ing to the grower on and after September 15, 1917, a price of 
£6 per ton, in lots of not less than 4 tons, for all sound 
marketable potatoes grown in 1917.^ 

The potato crop in 1917 was 8,603,000 tons or 3,154,119 
tons larger than the crop of 191 6. In a debate in the House of 
Commons during the latter part of October, 191 7, the govern- 
ment was severely criticized by Mr. Runciman and others. 
The guarantee of a minimum price was coupled with the 
prohibition to sell potatoes below the fixed price of £6 a ton. 
It was stated that in Ireland potatoes were spoiling in large 
quantities, because there was no market for them at the high 
price fixed. While the authorities were advising the people 
to use potatoes instead of bread, they were at the same time 
fixing the price of potatoes beyond the reach of the poor.* 
Thus, with supplies more than ample, cheap distribution was 
hampered by official control. In his reply to critics, Mr. 
Prothero did not deny that there might be a surplus of pota- 
toes, much of which, if prices were to be maintained at a mini- 
mum of £6 per ton, was likely to become bad. But, he affirmed, 
the government could not break its pledge to the producer.^ 

As one way out of the difficulty, Mr. Prothero proposed 
that some of the surplus should be used for mixing with 
flour for making bread and some for industrial alcohol. 

A general license was issued by the Food Controller on 
November 17, 1917, permitting growers to sell their own 
potatoes below the minimum prices fixed by the government.^ 
The government, however, undertook to recoup the growers 

1 Board of Trade Journal, April 5, p. 18; see also Statutory Rules and Orders, 
No. 178. 

^ Ibid., p. 230; see also Statutory Rules and Orders, No. 402. 

3 Ibid., p. 230. 

* The Economist, October 27, 1917, p. 692. 

5 Ibid., November 3, 191 7, p. 726. 

^ Board of Trade Journal, November 22, 191 7, p. 403. 



GREAT BRITAIN I29 

with the difference between the price at which they sold their 
potatoes and the guaranteed price of £6 per ton. In order to 
safeguard the Exchequer, a base price for different areas was 
fixed as follows: for England and Wales £5 per ton, free on 
rail, grower's station; for Scotland £4 los. per ton; for Ireland 
£4 per ton ; potatoes sold below the base price were to be con- 
sidered as sold at this price. The cost of the above scheme 
to the government was estimated at £5,000,000. It placed 
a burden on the taxpayer for the benefit of the farmer. 
The government, in justification of its policy, claimed that 
this guarantee of a high minimum price was instrumental in 
producing the great crop which was so desirable.^ While 
admitting that this claim has some force in it, the Economist 
finds " the real lesson of the potato comedy" in that it revealed 
the danger of meddling with economic laws; such action should 
never be taken except in cases of urgent national necessity. ^ 

Grain 

On April 16, 191 7, the Food Controller issued an order that 
no wheat, barley (other than kiln dried) or oats harvested in 
the United Kingdom in 191 6 may be sold at prices exceeding: 

Wheat, per quarter 78s. 

Barley, per quarter 65s. 

Oats, per quarter 55s. 

On the same day the Food Controller took over all barley 
other than home grown barley, which had not been kiln dried. ^ 
The average Gazette quotations at the time of the issue of 
the order were as follows : 

Wheat, per quarter 85s. 2d. 

Barley, per quarter 71s. 10 d. 

Oats, per quarter 57s. 2d. 

The fixed prices were superseded on August 14, 1917, by 
the following :^ 

1 The Statist, December 1,1917, p. 1121. 

2 The Economist, November 17, 1917, p. 807. 

^ Board of Trade Journal, April 19, 1917, p. 112. 
^ Ihid., August 23, 1917, p. 395. 



130 PRICES AND PRICE CONTROL DURING THE WAR 

Wheat and Rye Oats Barley 
For Delivery per Quarter of per Quarter of per Quarter of 
504 Pounds 336 Pounds 448 Pounds 
s. d. s. d. s. d. 
Before 1st December, 19 1 7 73 6 44 3 62 9 
In December, 1917, or Jan- 
uary, 1918 74 6 45 3 . 62 9 

In January, 1918, or March 

1918 75 6 46 3 62 9 

In Aprilor May, 1918. . . . 76 9 47 3 62 9 

On or after 1st June, 1918 . 77 9 48 6 62 9 

The order contains certain provisions permitting additions 
to these prices; thus where oats are bought by a miller specific- 
ally for the manufacture of oatmeal, rolled oats or flaked 
oats, 3s. per quarter may be added to the maximum price. 
In the case of damaged wheat, rye, barley or improperly 
cleaned oats, certain deductions are allowed. 

A number of flour and bread orders were issued before the 
establishment of a standard price for bread and flour in 191 7. 

The orders fixed the percentages of flour that could be ex- 
tracted from wheat of various origins and qualities, prohibited 
the use of wheat in the manufacture of beer and dealt with 
the various conditions on which bread might be manufactured 
and sold.' On April 30, 191 7, the Food Controller took over 
all flour mills in the United Kingdom which used any wheat 
in the making of flour, except mills the output capacity of 
which was less than 5 sacks of flour per hour. The effect of 
this order was that the mills passed into the possession of the 
Food Controller, the work in them to be carried on in accord- 
ance with his directions. 

The Flour and Bread Order, 191 7, dated September 17, 
established the following maximum retail prices for bread 
and flour: 

Bread 

Per 4 pound loaf 9d. 

Per 2 pound loaf 4|d. 

Per I pound loaf 2|d. 

Flour 

Sack of 280 pounds, or half sack per sack 50s. 

7 pounds or more, but under half sack, per 14 pounds 2s. 8d. 

Per quarters (3I pounds) 8|d> 

Per half quarters 4|d. 

Per I pound 2^d. 

Self-raising flour per pound 35d. 

' Great Britain Statutory Rules and Orders, 1917, No. 377, or Board of Trade 
Journal, April 26, 1917. 



GREAT BRITAIN I3I 

To enable the retailer to sell to the public at the retail prices 
named, wholesale prices had been fixed for flour. On and 
after September 17 wheat meal and flour manufactured in 
the United Kingdom was sold at 44s. 3d. per sack of 280 
pounds at the mill door. Imported flour was to be sold at a 
higher price according to quality. The price of 44s. 3d. has 
been fixed with a view of allowing the retailer a reasonable 
and not more than a reasonable profit.' 

The prices established by the government mean a reduction 
of 20 to 25 per cent on those previously charged. The yearly 
cost to the Exchequer of thus "subsidizing" flour and bread 
is about £40,000,000. The Statist condemns the arrange- 
ment by means of which the government "dipped into the 
taxpayer's pocket with one hand and with the other presented 
him with a 4 pound loaf for Qd."^ On the other hand, the 
Economist, while admitting that the subsidized loaf is open to 
serious objections, supports Lord Rhondda in his claim that 
"it is the best expedient in the present circumstances."^ 

The Oats and Maize Products (Retail Prices) Order, 191 7, 
dated May 9, 191 7 (No. 444) fixed maximum retail prices of 
4d. per pound for maize flour, maize meal and other like prod- 
ucts, and of s^d. per pound for oatmeal, rolled oats and 
flaked oats.^ This order was superseded by the Oats and 
Maize Products (Retail Prices) Order, No. 2, 1917, dated 
May 23, 191 7 (No. 482), which reduced the maximum prices, 
from June 18, for maize flour, maize flakes, hominy, etc. to 
3^d. per pound and for oatmeal, rolled oats, flaked oats to 
4^d. per pound in Scotland and 5d. elsewhere in the United 
Kingdom.^ 

Meat 

In August, 1 9 14, an act was passed in Queensland giving 
the Queensland Government full control over the meat sup- 
plies of the state for imperial purposes. Early in April, 191 5, 

^ Labcnr Gazette, September, 1917, p. 318. 

2 The Statist, December i, 1917, p. 1120. 

^ The Economist, July 28, 1917, p. 116. 

^ Defense of the Realm Manual, May 31, 1917. 

^ Ibid., see also Labour Gazette, June, 1917, p. 201. 



132 PRICES AND PRICE CONTROL DURING THE WAR 

a similar law was passed in New South Wales. In February, 
1 91 5, the Australian and New Zealand Governments agreed 
to buy on behalf of the British Government all the beef, 
mutton and lamb available for export. F. o. b. prices were 
amicably arranged in all states and the whole exportable sup- 
ply was shipped.' The great difficulty as to the imported meat 
supply throughout the war had been the shortage of shipping, 
to overcome which systematic shipping arrangements were 
made by the British Government. The method adopted by 
the government for distributing Australian meat among the 
civilian population was to resell it to firms who "formerly 
received the Australian supplies." These were selling the 
meat on commission and were bound to sell it "in the usual 
manner," so that "as far as possible it should pass through 
the usual channels and in the usual quantities." In case of 
supplies running short the available amount was "pro rata." 
"The distributors were held bound to sell only to bona fide 
retailers in the old proportion." This scheme was similar 
in its essential characteristics to that adopted for the dis- 
tribution of sugar and was open to the same objections. 
For two years unusual conditions had been confronting the 
country, a redistribution of population took place and yet 
the government imposed on dealers the sale of meat in the 
"old proportions." ^ In no case were the wholesale dis- 
tributors allowed to add more than ^d. per pound to the price 
which they paid to the selling agents. No price was fixed 
for retailers. The Board of Trade Committee on Prices 
thought that the wholesale selling policy probably was suffi- 
cient to secure a general check on inflation, the instructions 
to the agents being that they should aim at steady and moder- 
ate prices.^ 

Part II of the Meat (Sales) Order, 191 7, which came into 
force on June 4, 191 7, was directed towards securing the 
elimination of jobbing transactions in the sales of dead meat 
and towards limiting the salesmen's profits. A salesman 

1 Report (interim) of the committee on prices. Cd. pp. 9-10. 

2 E. Cannan, in the Economic Journal, December, 1916. 
* Interim Report on Prices, p. 11. 



GREAT BRITAIN 1 33 

selling a carcass, side or quarter could only charge 3d. a stone 
above the price at which he bought (id. additional if carcass is 
cut into smaller joints).' 

By the Meat (Maximum Prices) Order, 191 7, dated August 
29,2 schedules for maximum dead meat prices as from Septem- 
ber 3 were fixed. The beef prices corresponded to, and were 
based upon the maximum prices for live hundredweight for 
cattle purchased by the army: 

SCHEDULE OF MAXIMUM WHOLESALE MEAT PRICES ^ 

Beef and Veal Mutton and Lamb Pork 

Price per Ton Price per Stone Price per Stone 

Home Imported Home Home 

Killed Hind- Killed Imported Killed Imported 
19 1 7 Carcass quarters 

s. d. s. d. s. d. s. d. s. d. s. d. 

September 88 84 88 78 96 86 

October 84 80 88 78 96 86 

November 80 78 88 78 96 86 

December 80 78 80 78 96 86 

1918 

January 74 70 80 78 96 18 

The retail butcher could not sell meat over the counter at 
prices which in the aggregate exceeded the price paid by him 
by more than 2^d. per pound, or 20 per cent, whichever was 
the less. Out of this difference the retailer had to pay all his 
expenses of business. Furthermore, the local food control com- 
mittee was empowered to fix schedules of maximum retail 
prices for the various joints. These schedules varied from 
district to district, according to local conditions.^ 

An official statement issued on July 20, 191 7, announced 
that in agreement with the Army Council and the Agricultural 
Departments of England, Scotland and Ireland, Lord 
Rhondda had decided that the following should be the maxi- 
mum prices for live cattle for the Army : September, 74s, per 
live hundredweight, October, 72s., November and December, 
67s., January 6os.^ As shown above, maximum prices were 
fixed on a corresponding basis for civilian population and steps 

^ Board of Trade Journal, June 7, 1917, pp. 532-533, or Statutory Rules and 
Orders, 1917, No. 520. 

^ Board of Trade Journal. September 6, 1917, p. 505. 

^ Monthly Review of the U. S. Bureau of Labor Statistics, November, 19 17, p. lOl. 

'^Liberal Magazine, August, 1917, p. 363. 



134 PRICES AND PRICE CONTROL DURING THE WAR 

were taken to control the profits of butchers and others in 
such a manner as to ensure that the benefit of the reduced 
prices would accrue to the consumer. The fixing of maximum 
dead weight prices for cattle limited the profits of the farmer 
and of the cattle buyer, and the fall in wholesale price at the 
end of 1 91 7 compared with July of the same year was 19 
per cent in the case of mutton and 17 per cent in the case of 
beef.' 

Fearing that the new scale of fixed prices might lead to a 
reduction in the supply, the Food Controller reduced the cost 
of feeding stuffs to the farmer, and by an order of November 
I substantial reductions were effected in linseed and other 
kinds of cake, milling offals and various cattle foods. ^ This, 
however, helped matters very little. 

An anomalous situation with regard to meat arose at the 
•end of 191 7 owing to high prices of live stock as compared 
with fixed maximum prices for meat. The Food Controller 
issued an interim order, limiting the prices which could be 
paid for live stock.'' 

The effect of price fixing in the case of meat is not easy to 
follow. While one can readily ascertain and, if necessary, 
limit the number of cattle, sheep and pigs slaughtered, the 
more important thing to know is the rate of breeding to 
replace the numbers slaughtered. If farmers reduce the num- 
ber of calves bred, it takes time before the fact becomes ap- 
parent, and any legislation which leads to such results is harm- 
ful from the standpoint of future supplies. Mr. Prothero has 
been all along opposed to the reduction of the price of meat 
from 67s. to 60s. on January i, 1918. In his words, "it put a 
premium on grass as the cheapest form of cattle feeding; it 
penalized stall feeding on arable farms, and so tended to 
diminish the supply of manure, without which it was impos- 
sible to carry on arable farming with success."^ A new order 
left the price of cattle at 67s. per live hundredweight during 

1 The Statist, December i, 191 7, p. 1120. 

^ Ibid., p. 1 120. 

^ Board of Trade Journal, December 27, 191 7, pp. 664-65. 

^ The Economist, October 20, 1917, p. 564. 



GREAT BRITAIN 1 35 

the first six months of 1918, the reduction to 60s. to take 
effect on July i. 

In view of the excessive slaughter of calves, the Food 
Controller issued the Live Stock (Restriction of Slaughter) 
Order, which forbade the slaughter of heifer calves after 
January i, 191 8, and of male calves after March 15, 191 8. 
The order also prohibited the sale of lamb (other than im- 
ported lamb) between February i, 1918, and June 15, 1918, 
and the slaughter of in-pigs sows, in-lamb ewes, in-calf cows 
or in-calf heifers as from December 15, 191 7. 

The Meat (Retailers' Restriction) Order, 1918, issued on 
January 17, 1918, provided that a retail butcher could not in 
any week purchase a greater number of cattle or quantity of 
meat than the number or quantity prescribed by the Food 
Controller. The next step was strict rationing of consumers, 
to which it obviously had to come. 

Bacon, Ham and Lard 
The Bacon, Ham and Lard (Maximum Prices) Order, 1917, 
dated August 30, fixed maximum producers' and importers' 
prices. In connection therewith, it was pointed out that the 
importers' prices were mainly determined by the market prices 
ruling in foreign countries, over which the Food Controller has 
no control, and that they must be maintained at such a figure 
as will ensure the regular shipment to Great Britain of ade- 
quate supplies.^ One day previous to the issue of this order, 
the importation, except under license, of bacon, hams and lard 
was prohibited. The object of this step was to enable the 
government to take over the whole import of these articles, 
and to concentrate the purchase of them in various countries 
in a single organization. One of the immediate actions taken 
was the establishment in the United States of a single buying 
agency, analogous to the Wheat Export Company. It was 
provided that the goods imported on behalf of the Ministry of 
Food should be distributed through the ordinary channels on 
fixed terms as to commission and profits. ^ 

'^Labour Gazette, September, 1917, p. 318. 

2 Board of Trade Journal, September 6, 19 17, p. 505. 

10 



136 PRICES AND PRICE CONTROL DURING THE WAR 

Butter 
The Butter (Maximum Prices) Order dated August 31, 

191 7, established from September 3, 191 7, maximum whole- 
sale prices for butters of various kinds, and also provided 
that after September 10 no person should retail butter at 
more than 2|d. per pound in excess of the actual cost to him; 
an additional |d. per pound was allowed for credit or for 
delivery. Food control committees were empowered to 
prescribe from time to time a scale of maximum prices, in 
accordance with the general directions of the Food Controller,^ 
This order applied to home made butter, leaving imported 
butter out of control. The plan was found unworkable. On 
September 20, first hand maximum prices of butter have 
been fixed for or on behalf of the importer or maker of French 
butter at 238s. per hundredweight for French Paris (unsalted).^ 
At about the same time the Food Controller announced that he 
had appointed an advisory committee to consider the control 
of purchase and distribution of butter supplies and that the 
committee was engaged in working out the details of a scheme 
for the complete control of the Imports of butter. 

Danish butter was selling at that time at a much higher 
price than the domestic product. Two orders were Issued at 
the beginning of November, 191 7, one making certain altera- 
tions in the previous Butter Order and the other fixing the 
first hand price of both Danish and Dutch butter (at 229s. 
per hundredweight) as well as the price of blended butter 
from English factories.^ The purpose of these orders was to 
bring imported and home produced butter to approximately 
the same level of prices. The importation of Dutch butter 
ceased. Lord Strachie in a letter to the Times of January 9, 

191 8, pointed out that Lord Rhondda has fixed the price at 
which butter imported from Holland may be sold in the 
United Kingdom at 229s. per hundredweight, while the cost 
of producing such butter is 445s. "It is unnecessary,'^ 

1 Labour Gazette, September, 1917, p. 318. 

2 Board of Trade Journal, September 27, 19 17, p. 676. 
5 Ibid., November 8, 1917, p. 295. 



GREAT BRITAIN 1 37 

writes the Spectator, "to look any further for an explanation 
of the stoppage of supply of Dutch butter. A similar con- 
sideration applies to Danish butter."^ Maximum prices 
fixed for some of the other kinds of butter were as follows: 
x^ustralian, 220s., New Zealand, 224s, Argentina, 220s., 
British made, 230s. ^ The government expected that even- 
tually most kinds of butter would be sold to retail for 2s. 
3d. to 2s. 5d. per pound, without any loss to the Exchequer. 

Cheese 

Cheese imported from the United States, Canada, Australia 
and New Zealand was taken over by the Food Controller on 
May 29, 1917 (Cheese Requisition Order, 1917, No. 510).^ 
Prices fixed for this cheese were such as to enable the retailers 
to resell at is. 4d. per pound. The wholesale price of the 
British made cheese was fixed by an order dated August 31, 
19 1 7. This order also regulated prices to be charged by 
others than makers.-* The order was less than a month old, 
when the Food Controller announced that in view of the 
forthcoming advance in the controlled price of milk, and in 
order to encourage the making of cheese so far as any sur- 
plus supply of milk may be available, the maximum first 
hand price of all whole milk cheese would be raised to 137s. 
per hundredweight.^ The announcement enumerated certain 
exceptions to this price and then stated that on and after 
November i, 191 7, the maximum first hand price of whole 
milk cheese, with the above exceptions, would be not less than 
142s. per hundredweight. 

By an order dated December 8, 191 7, the Food Controller 
applied the provisions of the British Cheese Order to Dutch 
cheese. It fixed the maximum first hand prices chargeable by 
an importer, on full cream cheddar shapes at lOOs., with a 
proportionate decline on poorer grades.^ 

1 The Spectator, January 12, 1918, p. 31. 

2 Commerce Reports, November 6, 191 7, p. 497. 

^ The Defense of the Realm Manual, May 31, 1917, p. 308. 
^ Board of Trade Journal, September 6, 1917, p. 506. 
5 Ibid., September 27, 1917, pp. 676-677. 
^ Chamber of Commerce Journal, January, 1918, p. 11. 



138 PRICES AND PRICE CONTROL DURING THE WAR 

Tea 

On March 16, 191 7, the Food Controller announced that 
an arrangement had been made with the various tea associa- 
tions, representing importers, brokers and distributors, that 
on and after May i tea shall be sold retail at 2s. 2d. and 2s. 4d. 
(52.7 and 56.8 cents) per pound and upward. To insure a 
reasonable supply at the lower price, 40 per cent of the im- 
ports from India and Ceylon were to be allocated to the trade 
by the importers for this purpose.' The popular retail price 
of tea up to November, 1916, advanced 8d. per pound, of 
which 7d. per pound was increase in duty and only id. per 
pound was an advance due to other causes. In November, 
1916, the price was 2s. as compared with is. 4d. in 1914. A 
number of reasons brought about a rapid rise in price in the 
early part of 191 7. Some of these reasons were (i) market 
rumors that the Food Controller was going to take action 
with regard to tea, (2) exceptionally large demand on the part 
of consumers who anticipated shortage, (3) curtailment of 
supplies, first by the prohibition of the importation of tea from 
China and Java, and, second, by restriction of space allotted 
to tea shipments from Calcutta and Colombo.- 

In July the scheme of distribution was so amended that by 
arrangement with the trade 30 per cent of the total imports 
of tea from India and Ceylon was allocated to be sold retail 
at 2s. 4d., per pound, 35 per cent at 3s. 8d., and 25 per cent at 
3s. per pound, the balance of 10 per cent to consist of fine teas 
at above 3s. per pound. ^ 

At the time, the position of the tea supply attracted some 
attention in the press, and various statements, some of an 
alarming nature, appeared. In view of this the Food Con- 
troller reassured the public. According to him, though the 
importation of China and Java teas had been stopped, this 
has been more than balanced by the prohibition of exports 
except under license. The difificulty in providing tonnage 

1 Monthly Review of the U. S. Bureau of Labor Statistics, June, 1917, p. 940. 

^ The Economist, February 16, 1918, p. 268. 

^ Monthly Review of the U. S. Bureau of Labor Statistics, November, 1917, p. 98. 



GREAT BRITAIN 1 39 

has been met and adequate imports were insured. Economy 
in the use of tea, as in the case of all foodstuffs, has been urged. ^ 

There seems to have been a great deal of confusion in the 
tea trade, the blame for which the Cooperative Wholesale 
Society placed upon the Tea Advisory Committee; it bitterly 
attacked the composition of this committee and suggested 
that under state purchase and distribution a tea director be 
appointed with compulsory powers: 

(i) To acquire all stocks of tea in the country in the hands 
of growers and importers and all cargoes afloat at a reasonable 
profit commensurate with capital, expenditure, etc. 

(2) To distribute supplies as far as possible through exist- 
ing distributive channels. 

(3) To ensure the public their supplies of tea at a minimum 
profit. 

While the discussion was going on, the finer teas which the 
order permitted to be sold at above 3s. per pound soared 
higher and higher in price, and, what seemed puzzling to the 
public, the controlled tea, the 90 per cent from India and Cey- 
lon which had to be offered for sale at maximum prices, seemed 
to have practically disappeared ; all that the housewives were 
able to buy were the choicer teas at extravagant prices. ^ 

By an order dated October 17 it was provided that no tea 
should be sold after October 31, 1917, at a price exceeding 4s. 
per pound.'' Further regulations were made as to the prices 
of tea on December 14. The efi^ect of this and of the previous 
order may be summarized as follows: 

Maximum prices at which teas could be sold until December 
30, 1917: Class A, 2s. 4d. per pound; class B, 2s. 8d. to 3s. 
per pound; class C, 3s. to 3s. 4d. per pound; class D, 4s. per 
pound; uncontrolled 4s. per pound. 

On and after December 31 the maximum prices were fixed 
to be: Class A, 2s. 4d. per pound; class B, 2s. 8d. to 3s. per 
pound; class C, 3s. to 3s. 4d. per pound; class D, 3s. 8d. per 
pound, and uncontrolled, 2s. 8d. per pound. 

^Labour Gazette, September, 19 17, p. 319. 

2 The Economist, November 3, 1917, p. 726. 

^ Board of Trade Journal, October 25, 1917, p. 185. 



140 PRICES AND PRICE CONTROL DURING THE WAR 

Beans, Peas and Pulse 

By the Beans, Peas and Pulse (Requisition) Order, 191 7, 
dated May 16, 191 7 (No. 457), the Food Controller took over 
from the original consignees all beans, peas and pulse suitable 
for human food which had arrived or was to arrive in the United 
Kingdom.' The order was supplemented by a Retail Prices 
Order on May 29, 191 7 (Order No. 571), which fixed three 
schedules of maximum retail prices for various kinds of beans : 
one schedule, the highest, to apply until June 30, 1917, one, 
during July, 191 7, and one, on and after August, 191 7. The 
prices for the third period were fixed as follows : large butter 
beans, 8d. per pound; white haricot beans, 8d. ; colored haricot 
beans, 5|d.; large manufactured lentils, 8d.; small manufac- 
tured lentils, 7d.; blue and green peas, 9d,; yellow split peas, 
6d.2 The sale of peas in packages was authorized under 
certain conditions. 

A couple of weeks before the Issue of the first of these two 
orders the Food Controller took over by a special order all 
"Burmah" peas and beans arriving in Great Britain.^ The 
price to be paid was fixed at £37 per ton for handpicked white 
beans, prices for other varieties being at corresponding levels. 
Before this order market prices ranged around £80 per ton. 
The commandeered beans were to be sold at a retail price of 
6d. per pound, which was about half the price existing before 
the Food Controller's intervention. The classification " Bur- 
mah" covers various types of beans imported from Egypt, 
Spain, Japan and China, including the Soya bean. At the 
beginning of July, the Food Controller authorized, until 
August 15, sales and purchases of beans, peas and pulse 
contracted before May 30 at prices exceeding those permitted 
by the Order of May 29. ^ 

^ Defense of the Realm Manual, May 31, 1917, p. 261. 

^ Ibid., p. 262; or Board of Trade Journal, May 31, 19 17, p. 472. 

^ The Economist, May 5, 19 17, p. 774. 

* Board of Trade Journal, July 12, 1917, p. 82. 



GREAT BRITAIN I4I 

MisceUa?teous 

An order, passed in March, 191 7, and directed against the 
manufacture of "extravagant sweets,'' enforced a maximum 
retail price of 3d. an ounce for chocolates and 2d. an ounce for 
other sweets.^ 

Jam (Prices) Order, 191 7, dated August 15, fixed maximum 
wholesale and retail prices for various kinds of jam and jelly. 
The maximum retail price per pound ranged from 9d. for plum 
and apple to is. for strawberry and five other kinds. ^ 

Previous to the issuance of this order the Stone Fruit (Jam 
Manufacturers' Prices) Order and the Raspberries (Manu- 
facturers' Prices) Order fixed maximum prices at which jam 
manufacturers could buy home grown plums, damsons, green 
gages and raspberries.^ 

An order which came into force on December 10, 191 7, 
fixed the maximum retail price of roasted or ground coffee at 
IS. 6d. per pound and that of raw coffee at is. 4d. If a trader 
had coffee on offer at these rates he could sell better qualities 
of roasted or ground coffee at any price not exceeding 2s. 6d. 
per pound, and of raw coffee at any price not exceeding 2s. 4d.^ 

An order issued towards the end of December, 191 7, limited 
the retail price of home grown onions to 3d. per pound and pro- 
hibited retail sales to one customer of more than 7 pounds in 
one week. It also fixed growers' and wholesale prices.^ 

By an order in force on January 14, 1918, the maximum 
price of wild rabbits was fixed at 2s. if sold with the skin, is. 
9d. if sold without the skin, and lod. a pound for any part of a 
rabbit.^ 

The Food Controller fixed also maximum prices on fish. 

1 Monthly Review of the U. S. Bureau of Labor Statistics, March, 1917, p. 403. 

^Labour Gazette, September, 1917, p. 318. 

^ Ibid., July 1917, p. 238. 

* Chamber of Commerce Journal, January, 1918, p. 11. 

^ Ibid., February, 1918, p. 38. 



CHAPTER VIII 
Governmental Control and Price Fixing 

Coal 

From the earliest stages of the war questions concerning the 
prices of coal, the profits of coal operators and the wages of 
miners received a great deal of attention. Because of the sharp 
rise in prices and the shortage of supply, the Board of Trade 
appointed a committee to investigate the conditions in the 
retail coal trade. This committee reported the results of its 
investigation in April, 191 5. It studied mainly the conditions 
in London, and found that the actual increase in prices for 
best coal between June 16, 19 14, and February 17, 191 5, 
amounted to 9s. per ton, the price having risen from 26s. to 
35s,; the cheaper kinds rose more rapidly, "stove nuts" hav- 
ing increased in price from 20s. to 34s. The chief cause of the 
increase was a reduction of supply due to the fact that some 
1 30,000 miners had joined the colors. ' Four other causes helped 
to Intensify the scarcity of coal in London: (i) decrease in 
sea borne supplies; (2) congestion on the railways and shortage 
of wagons arising especially from military requirements; (3) 
lack of storage accommodation in London, except among 
wealthy people; (4) excessive demand at certain periods due 
to "panic" orders. The committee found that the cost of 
production at the mine had increased only slightly, by less 
than IS. (24.3 cents). The wages of miners and railway rates 
had not changed, and the increased cost of wagon hire, horses, 
fodder, etc., as well as increased wages of carters and loaders 
were found to amount to no more than 2s. per ton. The total 
rise in the cost of production and distribution was therefore 
at most 3s. per ton, while the price to the consumer in London 

1 Report (interim) of departmental committee to inquire into the causes of the 
present rise in the retail prices of coal sold for domestic use (Cd. 7866). London, 
1915; see also The Economist, April 10, 1915, p. 705. 

142 



GREAT BRITAIN 1 43 

had risen above normal winter rates by an amount varying 
from 7s. to us. 

The committee did not attribute high prices to definitely 
constituted "rings" or close corporations in the coal trade.' 
However, it called attention to the fact that there were oppor- 
tunities for "conferences" on the London coal exchange and 
that the advertised "public prices" were fixed by a few lead- 
ing firms. Prices charged, according to the committee's 
report, included a large surplus above ordinary profits, after 
making due allowance for increased cost of production and 
distribution. 

The committee recommended (i) restriction of exports to 
neutral countries, (2) accumulation of reserves in or near Lon- 
don, (3) reduction of freight rates on interned steamers, (4) 
assumption of control of the output of collieries by the govern- 
ment, should the prices not return shortly to a reasonable level. 
The investigation left an impression on the committee that 
the conduct of an industry on which such great national inter- 
ests depend can not be left safely in time of a crisis to the 
working of an unregulated system of supply and demand. 

Acting upon one of the recommendations of the Coal (Retail 
Prices) Committee, the Board of Trade prohibited the export 
of coal from England after May 13, 191 5, except to British 
colonies, to the Allies and to Portugal. The object of the pro- 
hibition was twofold: (i) to relieve the shortage of supplies 
and thereby reduce prices and (2) to prevent British coal from 
reaching enemies via neutral countries. A committee was 
appointed to supervise the coal export trade. 

On February 23, 191 5, the Board of Trade appointed a 
committee to inquire into the conditions prevailing in the 
coal mining industry, with a view to promoting such organiza- 
tion of work as would secure the necessary production of coal 
during the war. The report of this latter committee (Cd. 
7939) appeared a couple of months later than the one pre- 
sented by the Coal (Retail Prices) Committee. This report 
corroborated the conclusions reached by the Board of Trade 

1 Labour Gazette, April, 1915, p. 117. 



144 PRICES AND PRICE CONTROL DURING THE WAR 

Committee on Employment, namely, that indiscriminate 
recruiting in vital Industries, such as coal mining, should be 
called to a halt.' 

The committee found that the number of persons from coal 
mines who had joined His Majesty's forces up to the end of 
February was 191,170, or at the rate of 27,310 persons a 
month. This number represented 17.1 per cent of the total 
number of persons of all ages employed In coal mines at the 
beginning of the war (1,116,648); but the proportion of per- 
sons who left between the ages of 19 and 30, i.e. of those who 
were most fit to undertake arduous work, was estimated approx- 
imately at 40 per cent.- There has been a certain amount of 
replenishment of labor in coal mines from outside sources, but 
this replenishment did not make good the loss due to enlist- 
ment. Those who left were mostly trained, young and vigor- 
ous men; those who took their places were workmen of an 
entirely different character.^ 

Enlistments continued into 191 6, and it was estimated that 
by the end of September, 287,000, or more than 25 per cent 
of the labor employed In the collieries at the outbreak of the 
war, had joined the colors.^ Because of Inflow of labor from 
other Industries and reentry of men returned from the forces, 
the actual decline in the number of miners at work fell be- 
tween August, 1914, and June, 1916, by 13.7 per cent. The 
effect of the decrease In the number of miners was a decline 
in the output of coal. The following figures tell the story: 

PRODUCTION OF COAL^ Million 

Tons 

January to December, 1913 287 .0 

January to June, 1914 140.0 

July to December, 1914 • 125.6 

January to June, 1915 127.6 

July to December, 1915 126.6 

January to June, 1916 128 .3 

July to December, 1916 128 . i 

January to June, 1917 126.4 

July to December, 1917 121 .3 

^ The Economist, June 12, 1915, p. 1195. 

2 Monthly Review of tlw U. S. Bureau of Labor Statistics, July, 1915, p. 57. 

' Board of Trade Journal, January 24, 1918, p. 92. 

^ Labour Gazette, January 17, 1917. 

^ Board of Trade Journal, January 31, 1918, p. 122. 



GREAT BRITAIN 145 

On June i6, 1916, the government prohibited all recruiting 
from miners and decided further that all miners in the ranks 
of home service units, who were unfit for foreign service, 
should be returned to the mines. ^ 

The production of coal declined from 287,000 million tons 
in 1913 to 257,700 million tons in 1917, at a time when the 
country because of governmental requirements needed coal 
more than at any time in her history. The domestic sit- 
uation was somewhat relieved by restrictions placed on 
exports of coal. These restrictions coupled with reduction of 
tonnage available for shipments of coal led to a decline in 
export of coal from 77 million tons in 191 3, to 42 million tons 
in 1916 and 38 million tons in 191 7; the balance available for 
home consumption, admiralty and bunkers was thus 210 mil- 
lion tons in 1913, 214 million tons in 1916 and 207 million 
tons in 1917.- 

On July 29, 1 91 5, the Price of Coal (Limitation) Act (5 and 
6 Geo. V, ch. 75) was passed. It prescribed that the price of 
coal at the pit's mouth should not exceed by more than 4s. per 
ton (or such other amount as the board might order) the price 
of the same description of coal sold in similar quantities under 
similar conditions at the corresponding date during the twelve 
months ended June 30, 1914. The act also limited the charge 
for transportation from the pit's mouth on trucks owned by 
the mine operator to 50 per cent above that which prevailed at 
the "commencement" of the act. 

The Board of Trade authorized an increase of 5s. instead of 
4s. in the Forest of Dean district on September 17, 191 5. An 
increase of 6s. 6d. instead of 4s. was authorized by the board 
in the Monmouthshire and South Wales district on July 13, 
1916. A similar increase of 6s. 6d. was authorized in the 
Forest of Dean district and the 191 5 order was rescinded on 
October 18, 191 6. 

1 Great Britain. Coal Mining Organization Committee— third general report 
of the departmental committee appointed to inquire into the conditions prevailing 
in the coal mining industry due to the war. London, 1916. The second report 
of the committee was issued in December, 1915; quoted from Monthly Review of 
the Bureau of Labor Statistics, p. 534. 

^ Board of Trade Journal, January 24, 1918, p. 92. 



146 PRICES AND PRICE CONTROL DURING THE WAR 

After the passage of the Price of Coal (Limitation) Act, 
voluntary arrangements were made with the London coal 
merchants for limiting retail prices of house coal, and it was 
suggested to local authorities throughout the country that 
they might make similar voluntary arrangements with the 
coal merchants in their districts. The leading coal merchants 
in various important centers throughout the country under- 
took to limit charges added by them to the cost of coal, as 
delivered to the merchants, or not to advance prices above 
an agreed level without first consulting with the municipal 
authorities. In London a definite schedule of prices for sales 
of coal in small quantities was established, and the London 
County Council required this schedule to be kept posted in 
the small shops where coal was sold in penny worths and 
similar small quantities.- 

In order to assure the continuity of supplies to home con- 
sumers a Coal Exports Committee was created in May, 191 5; 
the next steps were the setting up during the second winter of 
the war (December, 1915-January, 1916) of district coal and 
coke supplies committees In different colliery districts and 
the establishment of a central committee, consisting of repre- 
sentatives of the Board of Trade, the Admiralty, the Home 
Office, the Ministry of Munitions, the Railway Executive Com- 
mittee, the coal mining industry and the coal trade. The 
functions of the local committees were to arrange for the most 
economical system of distribution and in particular to ensure 
adequate supplies to the war industries, while the central 
committee was entrusted with the consideration of questions 
of policy. At first the committees were on a voluntary basis, 
but legal difficulties because of committees' interference with 
contracts made it necessary to establish the system on a com- 
pulsory basis. ^ 

On November 29, 191 6, a regulation was passed under the 
Defense of the Realm Act giving the Board of Trade power to 
take possession of any coal mines where It appeared to them 

1 Report (interim) of departmental committee on prices, Cd. 7866, p. 7. 
^ Board of Trade Journal, January 24, 1918, p. 93. 



GREAT BRITAIN I47 

expedient "for securing the public safety and the defense of 
the realm." Because of a wage rate dispute this regulation 
was at once (December i, 1916) made applicable by order to 
the South Wales coal field;'- on February 22 all the mines in 
the kingdom came under control of the Coal Mines Depart- 
ment, ^ which had been established by the President of the 
Board of Trade. A Controller of Coal Mines (Mr. Guy Cal- 
throp) was appointed, as well as an Advisory Board, consisting 
of representatives of coal owners and coal miners. 

The powers given to the Coal Controller's department were 
very comprehensive ; they gave him full control over the pro- 
duction, distribution, storage and consumption of coal, includ- 
ing the fixing of maximum or minimum prices. The effect of 
the shortage of shipping was felt in the early part of 191 7 in 
the form of a considerable reduction in the quantity of coal 
exported and a serious fall in export prices. In order to deal 
with the position as regards prices, a code of directions as to 
the sale of coal was issued by the Controller of Coal Mines on 
June 28, 1917, embodying a schedule of prices of coal for 
exporting or bunkering.^ A series of amendments to these 
directions was issued on October 12, and the schedule prices 
were increased by 2s. 6d. per ton, except as regards shipments 
to France and Italy ;"* the latter was a rather unsatisfactory ar- 
rangement. "The scheme for the supply of coal to France 
and Italy at limited coal prices and rates of freight has been to 
deprive colliery companies, and particularly those producing 
mainly for export, of their private commercial character and 
virtually to convert them into a part of the state domain." 

The prices ranged from 30s. to 33s. per ton, f. o. b., for the 
better classes of large steam coals, and roughly from 20s. to 
23s. per ton for the better qualities of small coals. They were 
graded according to their relative economic value, and, on an 
average, were many shillings per ton higher than the current 

^Liberal Magazine, December, 1916, p. 573; Board of Trade Journal, vol. 95, 
p. 717. 

^ The Economist, November 3, 1917, p. 726; Board of Trade Jourrial vol. 96, 
p. 880. 

' Board of Trade Journal, January 31, 1918, p. 121. 

* The Economist, November 3, 1917, p. 726. 



148 PRICES AND PRICE CONTROL DURING THE WAR 

market prices. The scheme was thus vitally different from 
that which had been in force for the supply of coal to France 
since June, 191 6, for under that scheme there was one maxi- 
mum price of 30s. for large coals, irrespective of their relative 
qualities, and of 20s. for small coals. The new fixed prices 
were to be enforced without regard to current market condi- 
tions.' The scheduled prices operated as fixed prices in the 
case of shipments to France and Italy, and as minima in the 
case of shipments to neutral countries. Contracts entered 
into prior to May i, 191 7, were not to be interfered with, and 
the coals supplied to the Admiralty were excluded from the 
scheme.^ 

The price of coal in the United Kingdom was increased by 
2s. 6d. per ton at the pit's mouth in October, 191 7, in order to 
meet the cost of the special war wage of is. 6d. per day to 
adults and of 9d. per day to boys under 16, which was granted 
by the Coal Controller. But according to this new arrange- 
ment the coal owners who were supplying the home market 
exclusively were able to realize the extra 2s, 6d. on the whole 
of their outputs, while those who were selling to France and 
Italy were excluded from the benefit of this additional amount. 
Because of this, the concession granted by the Board of Trade 
did not represent more than is. lod. per ton when applied to 
the total production of the coal fields. The most affected col- 
lieries were those of South Wales and those in proximity to 
Tyne and other Northeast ports. The war wage advance of 
IS. 6d. per day was to be paid to all workmen, whether they 
worked or not; this placed a heavier burden upon those col- 
lieries where the loss of working time through tonnage scarcity 
was the greatest.^ The government increased the wages of 
miners and passed the price fixing law without consulting the 
colliery owners. 

One of the first measures taken by the Controller after his 
appointment was the preparation of a scheme of compensa- 

1 The Economist, July 7, 1917, p. Ii. 
'^ Ihid., July 14, 1917, p. 45. 
3 Ibid., October 20, 1917. 



GREAT BRITAIN 1 49 

tion to the owners of the mines. The Mining Association 
strongly recommended the acceptance of the control agree- 
ment to the coal owners, but so many owners were opposed to 
the scheme that it was decided to abandon all attempts at a 
voluntary agreement. On October 25 Sir Albert Stanley 
introduced in the House of Commons a bill "to confirm and 
give effect to a certain agreement relating to the compensation 
to be paid in respect to the control of coal mines and other 
matters arising out of such control." The bill was passed as 
the Coal Mines Control Agreement (Confirmation) Act.' 
One of the main features of the agreement was the surrender 
by the owners of 95 per cent of any profits in excess of the 
"profits standard" (that is, the average profits of the best 
two out of the three years before the Avar, or the best four 
years out of six) , the Controller receiving what remained after 
payment of excess profits duty of 80 per cent. The Controller 
on the other hand, guaranteed the prewar profits standard 
to all collieries, subject to a reduction where the output was 
reduced. 2 

Since the assumption of governmental control colliery com- 
panies have been held responsible for the working of the pits. 
When in October, 191 7, the financial arrangements of state 
control were disclosed, it became apparent that many of the 
pits had been working at a loss. 

In view of continuous complaints that were coming in as to 
excessive prices charged by dealers selling coal in small quanti- 
ties, the Board of Trade made an arrangement with wholesale 
merchants, by dint of which they agreed to refuse to furnish 
supplies to dealers who charged prices higher than the recog- 
nized maximum prices, which were established as follows i^ 

Street Sales from Trolley 

North London is. lod. per cwt. 

South London is. i id. per cwt. 

Shop Sales 
id. per cwt. higher than the above trolley price for the district. 

1 Board of Trade Journal, January 31, 1918, p. 119. 

- Ibid., p. 119. 

^Labour Gazette, February, 1917. 



150 PRICES AND PRICE CONTROL DURING THE WAR 

Under the regime of the Controller of Coal Mines the regu- 
lation of prices was extended to cover both wholesale mer- 
chants' charges and retail prices. Powers to fix prices were 
confirmed by the Wholesale Coal Prices Order and the Retail 
Coal Prices Order made by the Board of Trade on September 
5 and II, respectively. The function of fixing in each locality 
the maximum retail prices of house coal which would comply 
with the requirements of the Retail Coal Prices Order was 
assigned to local authorities.' 

As the requirements of the Admiralty and of essential war 
industries expanded enormously, supplies available for in- 
land consumers had to be cut down. The situation became 
very acute in the spring of 191 7, after a prolonged and severe 
winter, which had resulted in a largely increased consumption 
of house coals. Strictest economy was insisted upon and the 
London district definitely rationed, under the Household Coal 
Distribution Act, which was passed in September, 191 7, for 
London and a large area around the city. The unit of dis- 
tribution was the room. 

No person could, after October i, 1917, sell, deliver, purchase 
or acquire for consumption inadwellinghouse, flat or tenement, 
coal exceeding the quantities allowed in -the following table: 

Coal allowance from 
Number of rooms occupied October i to March 31 

Not more than 4 2 cwts. per week 

5 or 6 3 cwts. 

7 I ton 

13, 14 or 15 2 tons 

More than 15 2 tons, 10 cwts. 

For the period from April i to September 30, the allowance 
was at the rate of half that shown. 

Coal allowances in excess of hundredweights were to be 
reduced in the event of stocks of coal falling below a deter- 
mined level. 

Additional allowances not exceeding 2 hundredweights per 
week were granted in certain cases: (i) the presence of aged 
and infirm persons, invalids or young children, (2) the absence 
of any provision for gas, electricity, etc.^ 

^ Board of Trade Journal, January 31, 1918, p. 121; September 20, 1917, 
pp. 621-622. 

- Labour Gazette, August 17, p. 277. 



CHAPTER IX 
Home Production of Food and Minimum Prices 

In the hope of obtaining practical proposals for increasing 
the production of food, three departmental committees were 
appointed in June, 1915, one by the Board of Agriculture and 
Fisheries, one by the Board of Agriculture for Scotland and 
one by the Department of Agriculture and Technical Instruc- 
tion for Ireland, "to consider and report what steps should be 
taken by legislation or otherwise for the sole purpose of main- 
taining and, if possible, increasing the present production of 
food" in England and Wales, Scotland and Ireland.' The 
English committee was appointed on June 17 and a month 
later it presented its interim report.^ 

In this report It was laid down that the main problem was 
how to Increase the area under wheat, 95 per cent of the home 
supply of which is produced In England and Wales. The 
committee came to the conclusion that this could be solved 
only by extending largely the area of land under tillage. This 
would enable more of the existing arable land to be put down 
in wheat, leaving the newly broken upland for the other neces- 
sary crops thus displaced, such as oats and potatoes. In order 
to induce farmers and landlords to change some of their meth- 
ods, with their comparative security of profits, and to Influence 
them to undertake the responsibility of increased arable area 
in the face of certain shortage of labor and of a possible fall 
in grain prices at the conclusion of the war, the committee pro- 
posed the guaranteeing of a minimum price of 45 shillings a 
quarter for all marketable home grown wheat for a period 
of four years. The committee estimated that. If such a guar- 
antee were given, the area cropped, which was just under 
2,000,000 acres, would be Increased by at least another million 

^ International Review of Agricultural Economics, vol. Ixi, pp. 102-104; see also 
C. S. Orwin: The Report of the Departmental Committee on the Home Production 
of Food," Economic Journal, March, 1916, pp. 108; Labour Gazette, November, 
1915, p. 326. 

2 Cd. 8048. 

11 151 



152 PRICES AND PRICE CONTROL DURING THE WAR 

acres In 191 6, in which case there would be 4 or 5 million 
quarters more wheat grown at home (an additional six weeks' 
supply for the whole of the United Kingdom). 

The committee recognized that a guaranteed price for 
wheat should entail upon the farmer the obligation to pay a 
fair rate of wages to his laborers; in fact, some members were 
evidently in favor of accompanying the minimum price with a 
minimum wage. They contented themselves, however, with 
recommending that an inquiry into wages and earnings should 
be instituted at once. 

As to the method of carrying out the guarantee, the com- 
mittee recommended that payment to the farmer should be 
regulated by the difference between 45s. and the Gazette aver- 
age price of wheat for the year in which the wheat is harvested, 
the farmer being left to dispose of his produce in the open 
market. 

The committee noted the objection to their proposal that 
it was conceivable that no great quantity of additional wheat 
might be produced beyond what would have been grown had 
no guarantee been offered, and that the state might, if wheat 
prices fell, be obliged to pay a considerable sum for a com- 
paratively unimportant result. Rejecting as unworkable in 
practice the suggestion that the guarantee should be limited 
to the additional wheat grown by farmers over and above 
their prewar production, measured by the harvest of 19 13, 
the committee recommended that the guarantee should be 
confined to those farmers who were able to show that they 
had rrade a reasonable effort to increase the production of 
wheat. As a test they proposed that a farmer claiming the 
grant should be asked to show (a) that he had increased his 
area under arable production by at least one-fifth over the 
similar area in October, 1913, or, in the alternative (b) that 
at least one-fifth of his total acreage under grass and annual 
crops was actually under wheat. 

The committee considered the question whether, if a mini- 
mum price was secured to the farmer, there should not be a 
maximum price at which the government would have the 



GREAT BRITAIN 1 53 

right to take over all home grown wheat. Without making any 
definite recommendation in this matter, the committee sug- 
gested that if, in the opinion of the government, a maximum 
price was desirable, it should be fixed at not less than 55s. per 
quarter. 

After a consideration of the interim report, the government 
decided not to adopt the recommendation of a guaranteed 
minimum price for wheat. The reasons for this decision were 
set forth by Lord Selborne, President of the Board of Agricul- 
ture, at a meeting of representatives of the Royal Agricultural 
Society, the Central Chamber of Agriculture, the National 
Farmers' Union and other organizations, which was held in 
London on August 26. Lord Selborne stated that shortly 
after the report had been received the agricultural returns 
for 19 15 came to hand. As compared with 1913, there were 
500,000 more acres of wheat under cultivation, an increase of 
nearly 30 per cent, while the increase in cattle was 384,000 and 
in sheep 450,000. In view of these remarkable figures, of the 
fact that the call of agricultural laborers to the colors would be 
very heavy in the coming year, of the superabundant harvests 
in Canada and Australia and of the financial stringency which 
would prevail after the war, the government decided that they 
would not incur the additional financial liability involved in 
the proposed guarantee of a minimum price for wheat. 

On October 15, 191 5, the committee presented its final 
report (Cd. 8095) . They again took the opportunity of stating 
their firm conviction that the conversion of arable land into 
grass, which has taken place to the extent of nearly 4,000,000 
acres during the last 40 years and is still going on, was bound 
to result in a diminution of the food produced, and that much 
of this land would carry more stock if put under the plow, 
while at the same time producing corn for human consump- 
tion. The remainder of the final report dealt with the pro- 
vision of fertilizers and feed, increased pig breeding, labor, 
labor saving machinery and the employment of women. 
Attention was also called to the use of waste land in towns 
and villages for the production of vegetables. 



154 PRICES AND PRICE CONTROL DURING THE WAR 

The report of the Scotch committee contains no recommen- 
dation as to the establishment of a minimum price. The 
advisabihty of resorting to artificial means in order to stimu- 
late the production of wheat was considered by the committee 
and some of the witnesses gave evidence in favor of a guar- 
anteed minimum price, but they did not see their way to 
overcome the practical difficulties which were likely to arise. 

The Irish committee recommended that the government 
should guarantee a minimum price for oats and wheat for one 
year; they expressed the opinion that in view of the risk of 
loss run by the farmer in breaking up grass, there would be no 
departure from sound economic policy in agreeing to a mini- 
mum price to secure him against contingencies. No actual 
figures were suggested for the guaranty. 

The question of guaranteed minimum prices for wheat and 
for oats was brought to the front in connection with the Corn 
Production Bill, which Mr. Prothero introduced into the Par- 
liament in the early part of 1917. For the purpose of obtain- 
ing a larger home grown food supply, the bill proposed that 
the following minimum prices be fixed for wheat and oats of 
the following years: 

Wheat Oats 

Year per Qr. per Qr. 

1917 60 o 38 6 

1918^ 

1919 (■ 55 o 32 o 

1920 
1921 
1922 



45 o 24 o 



The average price was to be arrived at from the weekly 
averages, ascertained in accordance with the Corn Returns 
Act, during the seven months beginning on September i. As 
a corollary to guaranteed minimum prices, the bill provided 
(i) a minimum wage, to be fixed by an Agricultural Wages 
Board, which would aim at securing for able bodied men 
wages which, in the Board's opinion, are "equivalent to wages 
for an ordinary day's work, at the rate of at least 25s. a week" ; 
(2) a restriction of the power of landlords to raise the rents of 
existing tenants. The Board of Agriculture could enforce 



GREAT BRITAIN 155 

proper cultivation by determining varying covenants or con- 
ditions of tenancy, or by entering on the land and doing all 
such things as appeared necessary for cultivating it.' 

The bill provided that, if the average price of wheat or 
oats of any year for which a minimum price was fixed was less 
than this minimum price, the farmer was entitled to be paid 
by the Board of Agriculture and Fisheries for each quarter of 
wheat or oats which he produced and sold a sum equal to the 
difference between the average price and the minimum price 
per quarter. 

Previous to the introduction of the above bill a far-reaching 
"endowment of agriculture" had been partly adopted as a 
war measure. The announcement to this effect was made 
by the Prime Minister in his speech on February 23, 1917. 
The measures were outlined in the report of the Agricultural 
Policy Subcommittee of the Reconstruction Committee (Cd. 
8506), which was appointed in August, 191 6. The guaranteed 
prices recommended by this subcommittee were 42s. a quarter 
for wheat and 23s. a quarter for oats. The farmer was to 
receive from the state the difference between these prices and 
the Gazette average price for the year in case the latter was 
lower. The guarantee was to be perpetual. ^ 

Both the subcommittee's report and the Corn Bill aroused 
a great deal of opposition, the Nation (among many others) 
having expressed itself with great frankness and vehemence on 
the subject. In an article "Quack Medicine for Agriculture," 
the periodical pointed out that the reasons for the British low 
production in agriculture were a medieval system of land 
tenure, half serf labor, lack of brains, science, capital, enter- 
prise, cooperation, personal interest.^ These conditions could 
not be cured by guaranteed prices and by state subsidies. 

The Corn Bill was also attacked because of its failure to 
protect the community. It was brought out in the debate in 
the House of Commons on July 10 and 1 1 that the farmers and 
the landlord were guaranteed against loss or risk in return for 

1 The Economist, April 28, 1917, p. 727. 

2 lUd., March 31, 1917, p. 580. 

* The Nation. March 31, 1917, p. 873. 



156 PRICES AND PRICE CONTROL DURING THE WAR 

the extra efforts they were asked to make, but that the bill 
contained no provision for claiming for the state any part of the 
extra profits which were by no means unlikely to be realized. 
This, according to the critics of the bill, was unfair to the tax- 
payer who shoulders the liability in case of loss.^ 

Mr. Runciman, who was President of the Board of Agricul- 
ture from 1911 to 1914, suggested for improving the wheat 
situation, instead of guaranteed prices, the storage of corn, an 
adequate labor supply, rural housing, the extension of agri- 
cultural education, cooperation and farm experiments. As the 
Round Table correctly commented on these suggestions, though 
admirable as a peace program, " they sounded singularly un- 
helpful in the present crisis of the war."^ This magazine con- 
siders the guarantee an ingenious way of giving the farmer a 
stimulus for the cultivation of cereals without the setting up of 
a tariff and its accompanying uncertainties and inconveniences. 

Others who were in favor of artificial aid to agriculture 
attacked the government for not having acted upon the 
advice of the British committee in 191 5; they reproached 
the government because of its short sightedness, neglect and 
oversanguine view regarding the submarine peril. ^ Even the 
Spectator came out In the support of the Corn Production Bill, 
"because England is a besieged nation." "* 

At the beginning of January, 19 17, the Food Controller 
fixed the minimum price to the growers, for wheat of first 
quality of the 191 7 crop, at 60s. per quarter of 504 pounds. 
Minimum prices were fixed at the same time for oats and for 
potatoes.^ As this guarantee came practically too late in the 
season to have very much effect on the acreage under grain, 
one may safely state that during the first three and a half 
years of the war, except for receiving some supplies of fertilizers 
and feeding stuffs and some advice and Information, the farm- 
ers were not interfered with in their activities by the state. 

1 The Economist, April 28, 1917, p. 727; July 14, 1917- 

2 The Round Table, June, 191 7, p. 554- 

' Politicus: "The Food Problem and Its Solution," The Fortnightly Review, vol. 
ci, 1917, p. 435. 

* The Spectator, July 28, 1917, p. 78. 

s Board of Trade Journal, January 11, 1917, p. 96; February 15, 1917, p. 485. 



GREAT BRITAIN 1 57 

What they have done may be seen from the official estimates 
of the crops of the United Kingdom in each of the four years 
since the outbreak of the war:^ 

1914 1915 1916 1917 

Grs. Grs. Grs. Grs. 

Wheat 7,804,000 9,239,000 7,472,000 8,040,000 

Barley 8,065,000 5,862,000 6,612,000 7,189,000 

Oats 20,664,000 22,308,000 21,334,000 26,023,000 



Total 36,533,000 37,409,000 35,418,000 41,252,000 

Tons Tons Tons Tons 

Potatoes.. 7,466,000 7,540,000 5,468,000 8,603,000 

The areas under cultivation were increased between 19 14 
and 191 7 as follows i^ 

1914 1917 Increase or Decrease 

Acres Acres Acres 

Arable land 19,414,000 19,652,000 +238,000 

Wheat 1,906,000 2,104,000 -j- 198,000 

Barley 1,873,000 1,797,000 — 76,000 

Oats 3,899,000 4,762,000 +863,000 

Total corn crops 7,678,000 8,663,000 +985,000 

Potatoes 1,209,000 1,365,000 +156,000 

A compulsory census taken in April, 191 8, gave the follow- 
ing acreage under the leading crops: 

ENGLAND AND WALES 

Crop Acres Increase over 19 16 

Wheat 2,665,000 +752,000 +39% 

Barley i ,490,000 + 58,000 + 1 1 

Oats 2,820,000 +735,000 +35 

Rye, dredge corn and pulse 682,000 +280,000 +69 

Potatoes 645,000 +217,000 +50 



Total of corn and potatoes 8,302,000 +2,042,000 

The area under wheat was the highest recorded since 1882; 
that under oats and potatoes the highest on record by 20 per 
cent and 2"] per cent, respectively.^ Similar estimates for 

1 R. Henry Rew: "The Prospects of the World's Food Supplies after the War," 
Journal of the Royal Statistical Society, January, 1918, p. 44. 

2 Ibid., p. 43. 

1 Report (interim) issued by the Director General of Food Production. The 
Economist, June i, 191 8, p. 940. 



158 PRICES AND PRICE CONTROL DURING THE WAR 

Scotland and Ireland were 300,000 and 1,500,000 acres, respec- 
tively, making a total increase of over 4,000,000 acres. On 
the dint of the above figure the Director General of Food 
Production estimated that if an "average" crop is realized, 
the United Kingdom harvest of 191 8 will supply four-fifths of 
the yearly requirement of breadstuffs, as compared with one 
quarter of the year 1917-18 and one-fifth of the year 1916-17. 
The Economist warns against accepting the latter part of the 
report on its face value, as it is based largely upon "estimates" 
and "anticipations" and not upon definitely ascertained 
facts. 1 A similar view is held by the Statist. This periodical 
reminds its readers that the average yield of crops has fallen 
rather heavily since the commencement of the war and that 
further developments in this direction are possible." 

The rising price and the shortage of fertilizers and, to some 
degree, of feeding stuffs, coupled with the withdrawal of labor 
from the land, all tended to diminish the average yield per 
acre. In comparing the yields of some of the chief crops in 
the three years affected by war conditions with the standard 
of the previous ten years, one obtains the following results for 
England and Wales. ^ 

AVERAGE YIELD PER ACRE 
1905-14 

Bushels 

Wheat 32 o 

Barley 332 

Oats 40.2 

Beans 30.3 

Peas 26.4 

In the United Kingdom the number of cattle increased from 
12, 184,000 in 1914 to 12,342,000 in 1917, an increase of 158,000 
head; the number of sheep declined from 27,964,000 to 
27,771,000 a decrease of 193,000, and that of pigs from 3,953,- 
000 to 2,999,000, a decrease of 954,000. 

1 The Economist, June i, 191 8, p. 940. 

2 The Statist, June 8, 1918, p. 983. 
* Rew: op. cit.,p. 45. 





Increase 


[915-17 


or 
Decrease 


iushels 


Bushels 


29.4 
30.3 
33.8 
250 
23.2 


-2.6 
-2.9 
-1.4 

-5-3 
-3-2 



GREAT BRITAIN 159 

The yearly quantities in tons of home grown and imported 
meats (beef, mutton and lamb) available for consumption in 
the United Kingdom for the last five years were:^ 

1913 1914 1915 1916 1917 

Home grown 1,095,300 1,115,560 1,118,010 1,142,910 1,085,000 

Colonial frozen 272,900 286,609 286,380 211,409 226,000 

South American, chilled 

proper 447,36o 403-476 323-762 267,309 258,000 

North American, chilled 

and frozen 401 4,380 53-835 54.998 66,000 

Live stock and fresh 

killed 10,245 7,852 2,552 827 

.Totals 1,826,206 1,817,877 1,784,539 1-677,453 1,635,000 

1 The Economist, March 30, 1918, p. 534. 



CHAPTER X 

Criticism of Price Fixing 

Criticisms of price fixing have been numerous and varied, 
the arguments used by the critics ranging from a blanket 
assertion that "high prices are nature's cure for scarcity" to 
most elaborate and painstaking demonstrations as to how this 
or that measure passed by the government affected the pro- 
duction, importation and distribution of some particular com- 
modity. The dangers of governmental control of prices as 
pointed out by Its opponents are double In character, political 
and economic. The political danger lies In giving too much 
power to uncontrolled Cabinet authority and In making the 
people rely more and mof-e on the government for action in 
order to remedy conditions which can best be met through 
the exercise of private initiative and through the operation of 
economic laws.^ The government begins to regulate prices 
largely because of the pressure of public opinion. But as the 
lowering of prices when there are not enough commodities to 
go around can not satisfy the demand, the only tangible results 
of It are Inconveniences and disappointments. People go to 
the shops In the expectation of obtaining food at the legal 
price and after waiting for hours they go away empty handed. ^ 
False hopes are raised and dissatisfaction and discontent 
result. People are made to believe that high prices are the 
result of artificial manipulations removable at wilP and not an 
"Inevitable consequence of the world conditions brought 
about by the war;"^ they clamor for stricter measures of con- 
trol and for more price regulation. 

In discussing the reasons for and the value of high prices the 
assertion has been repeatedly made that the rise in prices indi- 

^ The Spectator, January 23, 191 7, p. 692. 
" Ihid., March 31, 1917, p. 382. 

^A. Shadwell: "Food Prices and Food Supply," The Nineteenth Century and 
After, April, 1917, p. 736. 

^E. Cannan: "Industrial Unrest," The Economic Journal, December, 1917. 

160 



GREAT BRITAIN l6l 

cates one of two things, either Increase of demand or shortage 
of supply. Under such circumstances high prices are neces- 
sary; they act as a check on consumption, as an ehmlnator of 
waste, as well as a factor stimulating production and Importa- 
tion. It Is madness on the part of the government to arti- 
ficially interfere with prices, as by such Interference they are 
taking the first step towards creating the shortage which it is 
imperative to prevent.^ 

High prices not only draw commodities from the ends of the 
earth and offer an inducement for enlarging production, but 
they are supplying the very means by which the expansion of 
business can be carried on. "Efforts to increase output now 
. . . must be made upon a level of costs that Is temporary 
and abnormal and unless prices are high these efforts can not 
and will not be made. 2" 

It Is obvious that prices must be such as to afford a working 
profit to the least efficient producers whose output is needed 
to satisfy the demand. Since the war began many discarded 
blast furnaces, many abandoned mills have been refitted and 
put once more into operation. These are often worked by 
inexperienced laborers, the cost of production of such plants 
is necessarily high and, as long as their output is needed, it 
must be met by high prices for the finished products. 

The most Important consideration before the country, as 
has been pointed out by Mr. Runclman in his numerous 
speeches, and as has been asserted by many other speakers 
and writers, is not the question of price, but that of supply; 
by restricting prices the government is "encouraging consump- 
tion, discouraging production and preparing disaster."^ 

It Is much easier to fix maximum prices than to ensure the 
availability of supplies at such prices. After the price has 
been fixed the government must see to It that people who own 
stocks of goods do not withhold them from sale in expectation 
that the price will be raised, and that farmers and manufac- 

^ The Spectator, February 6, 1915, p. 181. 
2 The Economic World, July 21, 19 17, p. 78. 

^ Politicus: "The Food Problem and Its Solution," Fortnightly Review, vol. loi, 
p. 438; also The Spectator, March 31, 1917, pp. 382-383. 



1 62 PRICES AND PRICE CONTROL DURING THE WAR 

turers continue production; this is equivalent to industrial 
conscription in an extreme form.^ Without such conscription, 
a necessary corollary of arbitrary maximum prices fixed below 
the ruling market prices, "a period of acute shortage even of 
starvation for the poor can be easily brought about. "^ 

When price fixing is once begun there is no way of stopping 
it. One can not thrust the ramrod of maximum prices into 
the delicate mechanism of industry and commerce in but a 
few arbitrarily selected places.^ It is idle to fix prices for a 
few cereals and tubers, leaving other foodstuffs unregulated. 
Such procedure opens the way to substitution and it may lead 
to total disappearance of the regulated articles from the mar- 
ket. If the price is fixed only for milk, milk may be converted 
into butter; if the price of butter is also regulated, milk and 
butter may be converted into cheese; if cheese is added to the 
list of controlled foods, milk cows may be converted into beef; 
if the price of beef is also fix^d, the farmers may withdraw en- 
tirely from dairying and cattle raising,'* and so on, until the 
policy, in order to have any chance of success, is extended to 
all the products as well as to all the processes, the materials 
and the labor involved in their making. According to the 
Bankers' Magazine "the only just and fair system for regulat- 
ing and controlling prices, in an equitable manner, is to fix all 
prices: (i) the prices of all commodities — all articles of mar- 
ketable wealth: (2) the rates of hire — rent, interest, freight 
for every kind of both fixed and circulating capital; (3) the 
rates of hire — wage, salary, pay— for every kind of both 
skilled and unskilled labor. "^ 

This, however, leads to the binding of the entire trade of 
the country into an inextricable tangle of official regulations; 
it involves the appointment of numerous boards and com- 

' The Saturday Review, September 9, 1917, p. 242; also The Spectator, vol. 117, 
1916, p. 465. In the latter an attack is made on Mr. Barnes, Labor member in 
the House of Commons, for his speech demanding among other things the fixing 
of the price of milk and making it a penal offense for any farmer to give up the 
business of dairying. 

^ The Nation, January 2, 1917. 

^ Ibid.. January 20,1917. 

* The Saturday Review, September 9, 1917, p. 242. 

^Bankers' Magazine. January, 1918, p. 94. 



GREAT BRITAIN 1 63 

missions, the employment of countless supervisors, clerks and 
other officials, the issuance of innumerable orders, rules and 
regulations; it also "involves endless frauds, including the 
wholesale forgery of food tickets, together with a general 
lowering of the moral standards of the community."' 

Beginning with the promulgation of a few orders regulating 
prices, Great Britain "reached a stage when practically every- 
thing is controlled, and the greater the control the more com- 
plete the confusion and the greater the economic loss."^ 

Light was shed on the present conditions by a list published 
at the end of 191 7; this list enumerates certain commissions 
and committees set up to deal with public questions arising 
out of the war. The following committees deal, directly or 
indirectly, with food, fuel and clothing:^ 

Agricultural and Fisheries Board and Royal Agricultural 
Society (Joint Committee) ; Agricultural and Consultative 
Committee; Cargoes (Diverted) Committee; Cargoes (Delay 
in Unloading) Committee; Cattle, British Committee on 
Utilization of; Coal Exports Committee; Coal Mines (Con- 
troller of) Advisory Board; Coal Mines Department; Cotton 
Control Board; Cotton Exports Committee; Distributing 
Trades (Scotland) Committee; Exports Committee; Fertil- 
isers Commitee; Fish (Coarse) Irish Committee; Fish (Cured) 
Committee; Fish Food and Motor Loan Committee; Fish 
Food Committee; Fresh Water Fish Committee; Fisheries, 
Sea, (Scottish) Committee; Flour Mills Control Committee; 
Food Ministry; Food Production Advisory Committee; Food 
Production Department; Food Production in Ireland Advisory 
Committee; Food Production in Ireland Departmental Com- 
mittee; Food Production in Scotland Committee; Foodstuffs 
(Carriage of) Requisitioning Committee; Forage Committee 
(Farm Produce); Fruits (Import Licenses) Committee; Grain 

1 I. Hilton: "The Foundation of Food Policy," The Edinburgh Review, July, 
1917, p. 50. 

2 A. Hurd: "Wages, Prices and Supplies — A Vicious Circle," Fortnightly Review, 
January, 1918, p. 45. 

^ List of certain commissions and committees set up to deal with public questions 
arising out of the war, Cd. 8741 ; quoted from A. Hurd: "Wages, Prices and Sup- 
plies — A Vicious Circle," Fortnightly Review, January, 1918, p. 45. 



164 PRICES AND PRICE CONTROL DURING THE WAR 

and Potato Crops (191 7) Committee; Grain Supplies Commit- 
tee; Import Restrictions Department; Indian Wheat Com- 
mittee; Kitchen (Central) Committee; Leather Supplies Com- 
mittee; Meat Supplies, Interdepartmental Committee; Milk 
Distribution Committee; Oats Control Committee; Pig 
Breeding Industry (Ireland) Departmental Committee; Port 
and Transit Executive Committee; Poultry Advisory Com- 
mittee; Committee on Production; Rationing Consultative 
Committee; Relief of Distress Committee; Sugar Supplies 
Royal Commission; Tea Advisory Committee; Tea Control 
Committee; Wheat Executive; Wheat Supplies Royal Com- 
mission ; Wool Purchase Central Advisory Committee. 

In discussing maximum price fixing for agricultural prod- 
ucts, the Nation asked very pertinently: " Does Mr. Prothero, 
when he says a farmer can get a profit at £6, mean any farmer, 
or a farmer with the best potato lands?" It called attention 
to the folly and injustice of fixing selling prices not merely for 
existing but for future supplies, without any guarantee against 
further rises in the cost of production.' 

The Spectator called attention to the profound mistake made 
by the government in assuming that it can regulate agricul- 
tural produce with the same ease that it can control the out- 
put of staple manufactures. The factory is designed and 
equipped for one more or less narrow line of product and is 
incapable of being readily diverted to any other line. The 
manufacturer keeps books and his business can be easily 
supervised. Agriculture, on the other hand, is carried on by 
a great number of farmers, who do not keep books and produce 
a variety of foodstuffs, altering their production as prices 
fluctuate.^ 

The food administrators, writes Mr. Hilton, have hovered 
confusedly between penalizing the food producer, out of ten- 
derness for the poor, and spoon feeding him to the greater 
prosperity of agriculture. At one moment he must sell his 
milk for less than it is worth; at another he must have a 

^ The Nation, January 20, 1917. 

2 The Spectator, August 4, 1917, p. IIO. 



GREAT BRITAIN 1 65 

bounty If the price of grains drops. "Yesterday he must not 
receive more per ton for the remnant of his frost killed and 
disease perished potato harvest than he would have got had 
his stocks remained intact; today he must have a maximum 
price changed to a minimum price, apparently on the ground 
that he seems somehow keen on it, and, anyhow, it is only a 
matter of two letters."^ 

At the best, the fixing of a price or the establishment of a 
ruling, in accordance with which goods should be distributed, 
lacks the element of elasticity, and because of this it can not 
solve satisfactorily all the complex problems of economic life. 
But when the government fails to secure the help of the most 
experienced men in those industrial activities which it sets to 
regulate, when it supplants those whose life work has been the 
direction of business affairs by experimenting officials, rigid 
action is likely to lead into a sea of difficulties. 

Nonemployment by the government of the existing chan- 
nels of trade— particularly merchants and distributors — to 
carry out its purpose, has been bitterly attacked in a report 
issued by the Merchants Committee of the London Chamber 
of Commerce. This report points out that the government 
in the steps it has taken to regulate supplies has not sufficiently 
availed itself of the services of the mercantile community. 
The action of the Controller has in many cases led to high 
prices and ultimate scarcity. ^ According to the report, the 
main cause of the rise in prices has been the shortage of ship- 
ping tonnage. The only means for overcoming this is to 
stimulate production the world over by all possible means 
and to see that the tonnage available is used to the best pur- 
pose. This can best be done by encouraging ordinary trading 
channels in every way, with a minimum of governmental inter- 
ference. The committee saw no adequate ground for dispens- 
ing with the services of the merchant, whose relations with 
the suppliers and expert knowledge of goods involved should 
entitle him to be treated on reasonable terms by the state in 

1 Hilton: 0^. aV., p. 47-48. 

2 Iron and Coal Trades Review, London, August 10, 191 7, p. 137. 



1 66 PRICES AND PRICE CONTROL DURING THE WAR 

a business with which he alone had actual experience in the 
past.' 

The government in its control of trade has for the most part overlooked the 
merchants' collecting, conserving and distributing functions and acted on the 
assumption that products must inevitably be offered to the people in the United 
Kingdom. That assumption can be justified by the expectation that the country 
is ready to pay higher prices, and this is j ust the contingency which the government 
wishes to avoid. 

Instead of employing merchants and their correspondents 
and agents in all parts of the world to scour their respective 
fields, the government does nothing in many fields except to 
fix prices or limit imports, thus checking production and stop- 
ping the machinery by which production is fostered. ^ The 
merchants asked in their report for more enlightened control, 
a control that would check speculation, but would not break 
up the mercantile system of the country. 

The feeling of dissatisfaction in commercial circles against 
the methods adopted by departments of the government in 
controlling and restricting trade has been steadily growing. 
A public meeting was held in London on October 25, 1917, 
under the auspices of the London Chamber of Commerce, to 
protest against the administrative methods used, particularly 
in connection with the import and export business of the 
country. Opinions were expressed that the merchant com- 
munity was disregarded, activities of importing merchants 
seriously reduced, and that the effect of this was a serious 
shortage of supply.^ All sections of the business community 
demanded that the government should cease to act as inter- 
mediary between producers and consumers and should largely 
call upon those who have a practical acquaintance with 
particular trades, to assist and direct the various control 
departments. 

In calling attention to the views expressed at the merchants' 
mass meeting, the Statist wrote that these views were those of 
a section, but of a section of such importance in relation to 

^ The British Trade Journal, September i, 1917, p. 326. 

^ Ibid., p. 326. 

^ Chamber of Commerce Journal, December, 1917, p. 297. 



GREAT BRITAIN 1 67 

the workaday world as we now find it, that the opinions, crit- 
icisms and decisions of this body of men are in every way 
worthy of very serious consideration by the rest of the com- 
munity and particularly by the government.' 

The English grocers were also raising objections to the 
manner in which control measures were being executed. The 
Federation of Grocers' Associations, at its annual convention 
held in August, 191 7, at Portsmouth, adopted a resolution 
opposing any form of rationing, unwarrantably costly, and 
necessitating a new army of officials which could neither fur- 
nish the consumers with any larger supply of food than could 
be distributed through the existing methods nor ensure more 
equable distribution. Retailers expressed a desire that a 
small advisory committee of each trade affected by orders 
should assist the Food Controller.^ 

If the control exercised by the government has been a cause 
for criticism, its failure to exercise any, through its great 
weapon of finance, was also attacked on many occasions. It 
was emphasized that by rationing the buying power of the 
citizen by drastic taxation, the Chancellor might have greatly 
reduced the need for control and its consequent friction.^ 

As to the alternative for price fixing, the government should 
have dealt with the particular evil which had revealed itself. 
That evil was not the rise in prices, but the suspicion of 
"profiteering. ... If the government believed that the 
cry against 'profiteering' was justified, they ought to have 
dealt with it specifically ... by limiting the profits, by 
taxing them."^ 

1 The Statist, November 3, 1917, p. 731. 
^ The Interstate Grocer, August 25, 1917, p. i. 
' The Economist, February i6, 1918, p. 256. 
* The Spectator, January 12, 1918, p. 32. 



12 



APPENDIX TO PART I 



THE COURSE OF WHOLESALE PRICES i 
(Price levels during 1890-1899=100) 





I9I4 


1915 


1916 


230 


rAWADA 




, 


ZZD 


UNITED KINGDOM 

UNITED STATES 




1 
1 


ZIO 






1 
1 


ZOO 






.■-\ ,-■' A 


190 






/ // 


180 






/' ^.^--^^i 


170 




/ 


' y 1 

X i 


160 




--'' 


j / 

1 ,N 


150 




^/ 


/ 


/•40 




//"^^ 


/ 


130 




'r^ _ ./-• 













zzo 

ZIO 

zoo 
(30 
180 
IfO 
160 

tso 

130 



I Labour Gazette (Canadian), September, 191 7, P- 744. 



171 



172 



PRICES AND PRICE CONTROL DURING THE WAR 



THE RISE IN THE RETAIL PRICES OF FOODS i 

(Prices in July, 1914= lOo) 




>■ Labour Gazette (Canadian), September, 191 7, P- 74 1- 



GREAT BRITAIN 



173 



QUARTERLY MOVEMENTS OF PRICES 1 
Summary of Index Numbers, 1867-1877 = 100 







-s 

0.-^ 


•oo 



















Years 


u 


cd c 

+-' u 

<u 


Si; 




-0 




u 






0) 


-a 
c 


u. 
0) 




3 

a 


1^ 


•sE 
< 


if) 


g 




X 




g 


2 



> 

c75 


1913 


I 


71.6 


101.5 


55-7 


79.2 


113. 1 


83-0 


84.2 


91 .6 


86.4 


44-9 




II 


71.4 


99.1 


52.7 


77-7 


114. 4 


81. 1 


83-2 


90.9 


85-3 


45-2 




III 


69 -3 


99.1 


52.1 


76.6 


no. r 


85-2 


83.2 


91. 1 


85-0 


45-6 




IV 


65.8 


98.7 


54-0 


75-4 


104.8 


86.7 


83-3 


90.1 


83-9 


44-1 


1914 


I 


66.6 


98.7 


52.0 


75-3 


104.4 


83-1 


84.1 


89-3 


83-4 


43-7 




II 


67.0 


97.8 


51.8 


75-2 


98.4 


82.9 


82.5 


86.9 


82.0 


43-4 




III 


80.3 


102.0 


61.5 


84.4 


96.2 


82.4 


87.1 


88.1 


88.1 


39-4 




IV 


90.1 


100.9 


63 -9 


88.6 


97-2 


77-5 


97-2 


91. 1 


90.1 


37-1 


1915 


I 


105.0 


114. 6 


66.7 


100.8 


IIO.O 


85-4 


104.2 


100. 


100.3 


37-9 




II 


107.4 


129.0 


72.5 


108.0 


121 .6 


88.5 


107.4 


105.4 


106.5 


38.3 




III 


104.0 


130.5 


72.0 


107.0 


120.8 


93-5 


109.4 


107. 1 


107. 1 


37-9 




IV 


113. 8 


123.9 


68.7 


108.0 


131-2 


105-5 


119-3 


118. 


113-8 


42-5 


1916 


I 


125. 1 


137-5 


78.9 


119. 9 


150.0 


118. 1 


131. 1 


132.2 


127.0 


45-5 




II 


127.2 


1570 


88.2 


130.0 


156.2 


120.4 


1350 


136.2 


133-3 


54-2 




III 


127.9 


150.4 


85-9 


127.4 


154 -I 


127.8 


133-5 


137-3 


133 -I 


57-3 




IV 


163. 1 


159-8 


92.2 


147.0 


160. 1 


146.2 


147.0 


150.3 


148.8 


57-5 



The average of the numbers for the four quarters of each year do not agree 
in all cases with the annual averages, as the latter are partly calculated from revised 
figures. See also the Journal, 1893, p. 221; 1895, p. 144; 1901, p. 90; and 1909, 
p. 70. 



^Journal of the Royal Statistical Society, March, 19 17, p. 295, 



174 



PRICES AND PRICE CONTROL DURING THE WAR 



COMPARATIVE STATEMENT OF PRICES OF CERTAIN COMMODI- 
TIES IN APRIL, 1918, AND AT THE CLOSE OF THE THREE 
PRECEDING MARCH QUARTERS 

1914 1915 

Cleveland No. 3 pig iron per ton 51/3 67/3 

Steel rails per ton 130/ 150/ 

Coals, best Yorkshire (Silkstone) 

House, pit head price. per ton 13/3 18/ 

Copper (standard) per ton £65 £69 1/8 

Tin (standard) per ton £1745/8 £171^ 

Lead (English) per ton £193/4 £24 

Wheat (Gazette) 31/4 54/6 

Barley (Average 25/7 31/9 

Oats (per qr. 18/8 30/6 

Mutton (prime) per 8 lbs. 7/6 8/ 

Sugar (West India) per cwt. 11/6 nom. 

Coffee (Santos) per cwt. 49/9 52/6 

Tea (common) per lb. 5d. 9^d. 

Rice per cwt. 7/7I 12/ 

Cotton (middling) per lb. 7 . o8d. 5 . 48d. 

32's twist per lb. "Ifd. 8|d. 

Tallow per cwt. 32/3 37/6 

Hemp (Manilla) per ton £27 £41 

Silk (Canton) per lb. 13/ I1/6 

Jute per ton £33^ £22^ 

Flax per ton £28^ nom. 

Petroleum per 7 lbs. 8d. 8§d. 

Rubber (fine hard Para) per lb. 3/ 2/5^ 

^ Broken and Fannings. 

1 The Economist, April 6, 1918, p. 564. 



I9I6 


1917 


1918 


90/ 


87/6 


95/ 


217/6 


225/ 


237/6 


18/3 


19/ 


24/ 


£116 


£i36i 


£iioi 


£199 


£2147/8 £316 


£36 


nom. 


£29 


53/6 


81/5 


72/3 


53/8 


71/10 


56/9 


30/5 


51/10 


50/3 


9/6 


10/6 


9/6 


nom. 


40/ 


44/6 


52/ 






7id. 


^i6d. 


''I9d. 


16/9 


26/6 


26/3 


7.83d. 


I2.82d. 


24.76d. 


i2 3/8d 


. l7 3/8d. 


. 42§d. 


48/6 


57/6 


70/6 


£56 


£96 


£100 


17/3 


17/9 


24/ 


£34 


£43 


£43 


nom. 


£94 


£147 


iid. 


I4d. 


19. 5d. 


3/oi 


3/ii 


2/9 3/4 



GREAT BRITAIN 



175 



The following table shows the growth in the national debt 
of Great Britain during the war period, and the means by 
which the money has been obtained, as accurately as can be 
traced from the weekly statements of income and expendi- 
ture and other sources of information:^ 



(In million pounds) 

Aug. Mar. Mar. Mar. Mar. Apr. 

I, 31, 31. 31- 31. 27, 

1914 1915 1916 1917 1918 1918 



586.7 
29.6 



583-3 
28.0 

349 I 



318.5 
26.1 
62.8 

900.0 



317.8 
24.0 
62.7 
20.0 



317-8 317 

24.0 24 

62.7 62 

20.0 20 



1,962.42,073.02,068 



Funded debt 

Term annuities 

3i% War stock, 

4^% War stock. 

4 & 5% war stock 

Nat. war bonds 

Treasury bills . . . 

Excheq. bonds . . 

War savings crts 

War expend. Do 

Other debt 

American loan . . 
^ Temp, advances 

653-3 1,105 .0 2,133 - 1 3.854-4 5.839-0 5.996 
Other cap. liabilities . . 57.2 57.0 56.7 52.2 51.2 51 



15-5 
20.5 



77-2 
67.4 



566.8 

177.0 

1.4 

9-2 

51-4 
19.9 



463-7 

320.3 

74-5 

23.6 

316.5 

51-4 

217-5 



614.2 
972 .6 
414.6 
136 
22 
936 

51 
192 



680 

953 
414 

145 
22 

973 

51 

261 



Change 

Since 

Aug. I, 

1914 

-268.9 

-5-6 

+62.7 

+20.0 

-4-2,068.4 

+680.7 

+937-9 

+394-1 

+ 145-9 

+22.9 

+973-3 

+51-4 

+260.7 



8+5.343-5 
o —6.2 



Total liabilities 



710.5 1,162.02,189.83,906.6 5,890.26,047.8 +5,337-3 



The Economist, May 4, 1918, p. 698. 



176 PRICES AND PRICE CONTROL DURING THE WAR 



ACREAGE UNDER CROPS AND NUMBER OF LIVE STOCK IN THE 
UNITED KINGDOM, 1914-19171 

1914 1915 1916 ^1917 
Acres 
Total area (excluding water) .... 76,455.391 
Total acreage under crops and 

grass 46,763,816 46,675,407 46,687,512 46,208,314 

Arable land 19,414,166 19,346,593 19,499,475 19,652,251 

Permanent grass 27,349,650 27,328,814 27,188,037 26,556,063 

Wheat 1,905,933 2,335,091 2,053,568 2,103,704 

Barley or here 1,873,280 1,524,316 1,653,376 1,797,149 

Oats 3,899,074 4,182,296 4,171,353 4,761,588 

Rye 66,890 60,040 65,971 69,399 

Beans 301,488 273,016 242,803 218,502 

Peas 169,938 130,307 113,474 131,944 

Potatoes 1,209,150 1,214,458 1,155,404 1,365,148 

Turnips and swedes 1,760,629 1,625,589 1,623,161 1,679,676 

Mangold 516,893 499,804 461,823 484,466 

Kow-rlbi .■.'.'.■.■;: ;;:;;;;:.■;::;} '^^-'^s ^84,584 183,346 151,450 

Vetches or tares I37.75I 123,657 102,629 93,247 

Lucerne 50,226 

Hops 36,661 34,744 3i,352 16,950 

Small fruit .. ._ 101,083 97,438 96,250 95,777 

Clover, sainfoin and grasses under 

rotation 6,606,046 6,462,279 6,763,01 1 5,994,450 

Other crops 288,673 282,104 351,459 275,672 

Bare fallow 348,532 316,870 430,494 362,015 

^The figures for the United Kingdom for 1917 do not include the Channel 
Islands. 

1 Journal of the Royal Statistical Society, January, 1918, p. 59. 



GREAT BRITAIN 1 77 



NUiMBER OF LIVE STOCK IN THE UNITED KINGDOM i 

1914 1915 1916 1917 

No. No. No. No. 
Horses used for agricultural pur- 
poses 1,326783 1,224,055 1,294,664 1,320,894 

Stallions . . . .^ . . . .^ ....^ ....* 

Unbroken f One year and above 351,794 320,542 346,962 375,308 

horses \ Under one year .. . 172,465 167,261 192,589 174,568 

Total 1,851,042 1,711,858 1,834,215 1,870,770 

Other horses . . . .^ . . . .^ ....'' . . . .^ 

Total of horses .... .... .... .... 

Cows and heifers in milk 1 ,„ ,0 o o ^ ^ 

Cows in calf but not in mUk..../ 4,144,937 4,068,957 4,034,382 3,998,642 

Heifers in calf 450,191 425,793 464,939 498,881 

Other f Two years and above . . 2,330,200 2,221,218 2,344,667 2,297,825 

, .J i Oneyearandundertwo 2,596,988 2,665,551 2,801,698 2,747,444 

( Under one year 2,662,189 2,789,933 2,805,854 2,762,588 

Total of cattle 12,184,505 12,171,452 12,451,540 12,342,268 

Ewes kept for breeding 11,255,727 11,341,904 11,603,904 11,405,015 

Other / One year and above . . 5,042,321 5,397,745 5,576,513 5,474,331 
sheep \ Under one year 11,665,929 11,536,321 11,669,238 10,841,761 

Total of sheep 27,963,977 28,275,970 28,849,655 27,770,555 

Sows kept for breeding 494,736 439,290 434,464 373,096 

Other pigs 3,457,879 3,355,841 3,181,427 2,624,561 

Total of pigs 3,952,615 3,355,131 3,615,891 2,998,657 

* Stallions are included in unbroken horses. 
^ No figures given for "Other horses." 

ESTIMATED CROPS OF THE UNITED KINGDOM, 1914-19172 

1914 1915 1916 1917 

Qrs. Qrs. Qrs. Qrs. 

Wheat 7,804,041 9,239,355 7,471,884 8,040,000 

Barley 8,065,678 5,862,244 6,612,550 7,189,000 

Oats 20,663,537 22,308,395 21,333,782 26,023,000 

Beans 1,120,078 924,155 892,572 474,000 

Peas 374,038 300,338 261,090 278,000 

Tons Tons Tons Tons 

Potatoes 7,476,458 7,540,240 5,468,881 8,603,000 

Turnips and swedes 24,195,755 24,431,083-23,318,170 24,841,000 

Mangolds 9,522,921 9,696,192 9,009,752 10,369,000 

"Seeds" hay 4,210,924 4,526,192 5,487,369 4,734,000 

"Meadow" hay 8,192,555 7,922,591 9,710,503 8,424,000 

^ Journal of the Royal Statistical Society, January, 1918, p. 6r. 
2 Journal of the Royal Statistical Society, January, 1918, p. 62, 



PART II 
THE UNITED STATES 



CHAPTER I 

Movement of Prices during the War 

Wholesale Prices 
The various index numbers of wholesale prices constructed in 
the United States all tell substantially the same story. Gen- 
eral prices remained comparatively stationary during the first 
year and a half of the war and then they began to advance, 
rising to new heights with each succeeding month, the only 
exception being the latter part of 191 7, when the upward 
trend was temporarily checked because of governmental 
regulation. Taking the most comprehensive of the index 
numbers, that of the United States Bureau of Labor Statis- 
tics, one finds that price fluctuations in the United States 
since 191 3 were as follows:' 

INDEX NUMBERS OF WHOLESALE PRICES, BY GROUPS OF COM- 
MODITIES AND BY YEARS, 1913 TO 1916, AND BY YEARS 
AND MONTHS, 1917 AND 1918 
(1913 = 100) 



YearandMonth ^ ^ ^.S ^.S ^_^ fe^ '^•^ ^o JS g 

g ^ 1^ -:a || II ^^ §^ I u 

£ £ D^ ^^ ^^ ^^ Q^ x-^ ^ < 

Average for 19 13 lOO loo 100 100 100 100 100 100 100 100 

Average for 19 14 103 103 98 92 87 97 103 103 97 99 

Average for 19 1 5 105 104 100 87 97 94 ii3 loi 98 100 

Average for 19 16 122 126 127 115 148 loi 143 no 120 123 

Average for 191 7 188 177 181 169 208 124 185 155 153 175 

1917 

January 147 150 161 170 183 106 144 128 137 150 

February 150 160 162 178 190 108 146 129 138 155 

March 162 i6r 163 181 199 in 151 129 140 160 

April 180 182 169 178 208 114 155 151 144 171 

May 196 191 173 187 217 117 164 151 148 181 

June 196 187 179 193 239 127 165 162 153 184 

July 198 180 187 183 257 132 185 165 151 185 

August 204 180 193 159 249 133 198 165 156 184 

September 203 178 193 155 228 134 203 165 155 182 

October 207 183 194 142 182 134 242 165 164 180 

November 211 184 202 151 173 I35 232 175 165 182 

December 204 185 206 153 173 I35 230 175 166 181 

1 Monthly Review of the Bureau of Labor Statistics, February, 1918, p. 16; March, 
1919, p. 115. 

181 



1 82 PRICES AND PRICE CONTROL DURING THE WAR 

INDEX NUMBERS OF WHOLESALE PRICES— Continued 

1918 

January 205 188 209 169 173 136 216 188 178 185 

February 207 186 213 171 175 137 217 188 181 187 

March 2x1 178 220 171 175 142 217 188 184 187 

April 217 179 230 170 176 145 214 188 193 191 

May 212 178 234 172 177 147 209 188 197 191 

June 214 179 243 171 177 148 205 192 199 193 

July 221 185 249 178 183 153 202 192 192 198 

August 229 191 251 178 183 156 207 227 191 202 

September 236 199 251 179 183 158 206 233 195 207 

October 223 199 253 179 186 157 204 233 197 204 

November 219 203 253 182 186 163 201 233 207 206 

December 221 207 246 183 183 163 182 233 204 206 

An analysis of the figures shows that prices In 19 18 were almost 
double those In 1913 ; the highest level was reached in Septem- 
ber, 1918, when the index number stood at 207; it declined to 
204 in October, but rose again to 206 during the next month. 
Taking commodities by groups into which they are classified 
by the Bureau of Labor Statistics, one finds that the average 
Index numbers increased from 191 3 to November, 191 8, in 
the case of farm products 119 per cent; food, etc., 103 per 
cent; cloths and clothing 153 per cent; metals and metal prod- 
ucts 86 per cent; lumber and building materials 63 per cent; 
chemicals and drugs loi per cent; house furnishing goods 133 
per cent; miscellaneous group (Including such articles as cot- 
tonseed meal and oil, newsprint and wrapping paper, rubber, 
tobacco, whiskey and wood pulp) 107 per cent. 

An Interesting and suggestive table of index numbers is 
contained In the Federal Reserve Bulletin for October, 1918. 
The numbers were constructed according to the method 
adopted by the Bureau of Labor Statistics, but with a different 
grouping of the commodities included. The grouping chosen 
comprises (i) raw materials, Including subgroups of farm, an- 
imal, forest and mineral products; (2) producers' goods, such 
as steel rails, copper wire and cotton yarn, and (3) consumers' 
goods, such as flour, beef and cotton textiles. The classifica- 
tion was made as far as possible in accordance with the prin- 
cipal use of the commodity, since certain articles are used 
both by producers and consumers and since it Is often difficult 
to distinguish between raw materials and producers' goods.' 

1 Monthly Labor Review, December, 1918, p. 147. 



THE UNITED STATES 



183 



The movement of wholesale prices in the United States since 
1 9 14, according to this tabulation was: 

Average for 1913=100 



Raw Materials 








<V CJ ^ 










. 


M 


2 Ort 3 




■M 










All Comn 
(Bureau 
Labor St 
Index N 


J- 13 

1^ 


OJ 
On" 


2 ^ 


5^1 







104 


97 


90 


99 


95 


lOI 


99 


100 


93 


91 


99 


100 


102 


100 


119 


96 


123 


118 


140 


123 


123 


169 


118 


179 


173 


187 


172 


175 


13b 


99 


175 


147 


166 


147 


150 


145 


100 


i«5 


151 


168 


155 


155 


156 


103 


191 


160 


171 


156 


160 


m 


105 


189 


169 


181 


172 


171 


168 


108 


196 


180 


189 


179 


181 


166 


120 


205 


1H5 


199 


178 


184 


168 


126 


198 


187 


212 


174 


185 


181 


128 


175 


i«3 


211 


175 


184 


195 


129 


167 


181 


203 


175 


182 


190 


129 


150 


178 


i«5 


181 


180 


187 


129 


157 


182 


181 


183 


182 


178 


129 


i5« 


178 


180 


185 


181 


174 


130 


171 


183 


181 


192 


185 


176 


131 


172 


184 


184 


193 


187 


178 


135 


172 


187 


187 


189 


187 


193 


137 


170 


190 


190 


193 


191 


201 


I3« 


173 


189 


192 


194 


191 


198 


13H 


171 


189 


194 


197 


193 


209 


140 


180 


196 


196 


202 


198 


215 


143 


180 


200 


199 


205 


203 



Year and Month Z 

u 

r o 

Average for 1914 103 

Average for 1915 11 1 

Average for 1916 128 

1917 

Average for year 210 

January 161 

February 157 

March 169 

April 198 

May 225 

June 227 

July 230 

August 232 

September 214 

October 227 

November 238 

December 233 

1918 

January 240 

February 242 

March 249 

April 243 

May 226 

June 232 

July 237 

August 246 



The rise in wholesale prices of individual commodities from 
July, 1914, to July, 1918, was:' 

WHOLESALE PRICES IN JULY, 1914, 1915, 1916, 1917 AND 1918, AS 
COMPARED WITH AVERAGE PRICES IN 1913 
(Actual Money Prices) 

July 
Article Unit 

1913 1914 1915 1916 1917 1918 

FOODSTUFFS 

(a) Animal 
Cattle, good to 

choice steers 100 lbs. $8,507 $9,219 $9,213 $9,985 $12,560 $17,625 

Beef, fresh, good 

native steers Lb. .130 .135 .132 .141 .164 .240 

Beef, salt, extra mess Bbl. 18.923 17.250 17.500 18.250 30.500 34.875 

Hogs, heavy 100 lbs. 8.365 8.769 7.281 9.825 15.460 17.720 

^ Monthly Labor Review, September, 1918, pp. 102-103. 

13 



184 PRICES AND PRICE CONTROL DURING THE WAR 

Conlinued 



WHOLESALE PRICES IN JULY, 1914-1& 

Bacon, short clear 

sides Lb. .127 

Hams, smoked, loose Lb. . 166 



Lard, prime, con- 
tract Lb. 

Pork, salt, mess. . . .Bbl. 

Sheep, ewes 100 lbs. 

Mutton, dressed . . .Lb. 

Butter, creamery 
extra Lb. 

Eggs, fresh, firsts. . .Doz. 

Milk Qt. 

(b) Vegetable 

Wheat, No. i north- 
ern Bush. 

Wheat flour, stand- 
ard patent Bbl. 

Corn, No. 2, mixed. Bush. 

Corn meal 100 lbs. 

Oats, standard, in 
store Bush. 

Rye, No. 2 Bush. 

Rye flour, pure, me- 
dium straight. . . .Bbl. 

Barley, fair to good, 
malting Bush. 

Rice, Honduras, 
head Lb. 

Potatoes, white. . . .Bush. 

Sugar, granulated . .Lb. 

TEXTILES AND 
LEATHER GOODS 

Cotton, upland, mid- 
dling Lb. 

Cotton yarn, carded, 
lo/i Lb. 

Sheeting, brown, 
Pepperell Yd. 

Bleached muslin, 
Lonsdale Yd. 

Wool, 1/4 and 3/8 grades, 
scoured Lb. 

Worsted yarn, 2/32 's Lb. 

Clay worsted suit- 
ings, 16-OZ Yd. 

Storm serge, all- 
wool, 50-in Yd. 

Hides, packers', 

heavy native steers Lb. 

Leather, chrome calf Sq. ft. 

Leather, sole, oak . .Lb. 

Shoes, men's, Good- 
year welt, vici calf, 
blucher Pair 

Shoes, women's, 

Goodyear welt 
gun metal, button Pair 



.141 
.177 



.III 
.161 



157 
190 



.110 .102 .081 .131 

22.471 23.625 18.500 27.167 

4.687 4.538 5.469 6.545 



103 



.310 
.226 
•035 



.095 .109 .131 



.270 
.187 
.030 



.261 
.169 
.030 



.276 
.223 
.031 



.248 
.240 

.201 

42.250 

8.600 

•145 

•376 
.318 
-050 



-584 
.625 

•599 


4-594 

.710 

1 .780 


7-031 

-783 

1-750 


6. 
I . 


-376 
.636 


•369 
.618 


■529 
1.036 




.123 


2.975 


5-388 


5^ 


.625 


•533 


•743 




.051 
.614 
•043 


-054 

1 .206 

.042 


.049 

-444 
• 058 





.128 


• 131 


.092 


.221 


•215 


.160 


•073 


.070 


.060 


.082 


• 085 


-075 


.471 

•777 


-444 
.650 


-557 
.850 I. 


• 382 


1.328 


I . 508 2 . 


-563 


-505 


-539 


.184 
.270 
-449 


.194 

•275 
•475 


-258 . 

.280 

-495 



3. 1 13 3-150 3-250 



2.175 2.260 2.350 



276 

303 

264 

500 

975 
205 

432 
374 
054 



.874 .897 1.390 1. 1 70 2.582 2.247 



100 

808 
982 


12.750 
2.044 
4.880 


10.702 

1.665 

4.825 


405 
966 


.764 

2.226 


-765 
1-705 


150 


II .620 


9-425 


746 


I 391 


1. 125 


045 
863 
075 


.070 

2.375 
.075 


.094 

I 035 

•074 



130 


.261 


.312 


253 


•450 


.640 


078 


.140 




088 


.160 


• 250 


686 
100 


I .200 
1 .600 


1-437 
2.150 


000 


3-250 


4-450 


760 


1 .176 


1.470 


270 
460 
635 


-330 
-540 
• 815 


-330 
.640 
.830 


750 


4^750 


5-500 


750 


3 500 


4.500 



THE UNITED STATES 



185 



WHOLESALE PRICES IN JULY, 1914-18— Continued 



MINERAL AND 
METAL PRODUCTS 

Coal, anthracite, 

chestnut 2240 lbs. 

Coal, bituminous, 

run of mine 2000 lbs. 

Coke, furnace, 

prompt 2000 lbs. 

Copper, electrolytic Lb. 
Copper wire, bare. 

No. 8 Lb. 

Pig iron, Bessemer . 2240 lbs. 

Steel billets 2240 lbs. 

Tin plate, domestic 

coke 100 lbs. 

Pig tin Lb. 

Pig lead Lb. 

Spelter Lb. 

Petroleum, crude. . .Bbl. 
Petroleum, refined, 

water-white Gal. 

Gasoline, motor. . . .Gal. 



313 5.241 5.200 5 



200 2 . 200 2 . 200 



538 
157 



2 .000 
•134 



■750 
.199 



167 .148 .210 
133 14.900 14.950 21 
789 19.000 21 .380 41 



558 

449 
044 
058 
450 



3 350 
•311 
•039 
.051 

I 750 



123 .120 
168 . 140 



3-175 
•391 
.058 
.220 

I 350 

. 120 
. 120 



507 5-933 
200 5 . 000 



750 
265 



1 5 . 000 

.318 



325 -338 
950 57.450 
000 100.000 



875 
389 
069 

113 
600 

120 
240 



12.000 
.620 
.114 

•093 
3.100 

. 120 
.240 



693 
750 

000 

254 

285 
600 
500 



750 
930 

080 
088 
000 

171 
241 



It may be seen from the table that a great many commodi- 
ties more than doubled in price. Conspicuous examples are 
wheat, wheat flour, corn and corn meal, oats, rye, cattle, hogs, 
bacon, lard, pork, cotton and cotton yarn, wool and worsted 
yarn, leather, coke and pig iron. 

In October, 1918, a number of commodities averaged less 
than in July of the same year.' A decided drop in price took 
place in the case of barley, corn and corn meal, rye flour, 
sheep, mutton and salt pork. Smaller decreases were shown 
for rye, wheat flour, potatoes, hides and leather, cotton yarn 
and pig tin. 

On the other hand, increases between July and October 
took place in the prices of bacon, ham, butter, eggs, milk, 
white cotton, hogs, cattle, fresh beef, wheat, sugar, shoes, 
copper, pig lead and spelter. For wool, coal, coke, pig iron, 
steel billets, tin plate, crude and refined petroleum and gaso- 
line, the price in October was practically the same as in July. 

Very valuable records of the movement of wholesale prices 
have been gathered by the Price Section of the Division of 
Planning and Statistics of the War Industries Board. The 



Monthly Labor Review, December, 1918, p. no. 



1 86 PRICES AND PRICE CONTROL DURING THE WAR 

grouping of commodities made by the board is somewhat 
different from that of the Bureau of Labor or of the Federal 
Reserve Board; the commodities are classified under seven 
major groups — food; clothing; rubber, paper, and fiber; 
metals; building materials; fuel, and chemicals. The quota- 
tions recorded by the Price Section are averages of prices 
taken at monthly or weekly intervals from the leading trade 
journals, from government bureaus, particularly the Bureau 
of Labor Statistics, and from private sources. In order to 
make possible a comparison of price fluctuations of different 
commodities during the war, relative prices on a fixed base 
have been figured to correspond to each actual quotation. 
These relative prices were made to represent the percentages 
of rise or fall of the actual prices from the level for the year 
immediately preceding the outbreak of the European war 
(July I, 1913. to June 30, 1914)- 

The first bulletin containing monthly quotations and aver- 
age prices was issued by the War Industries Board in October, 
1 91 8; it considers 88 commodities. 

Data showing the efTect of governmental price fixing upon 
the trend of wholesale prices are contained in a bulletin " Fluc- 
tuations of Controlled and Uncontrolled Prices," which the 
War Industries Board issued in December, 1918. As pointed 
out in this bulletin, a comparison could be made much more 
easily if all of the controlled commodities had been brought 
under regulation at the beginning of the price fixing period, 
for then the list of controlled commodities would have re- 
mained constant and furnished a definite basis for construct- 
ing an index number to measure the price changes. The fact 
that price control was extended gradually made it necessary 
to resort to two methods of comparison. The first method 
uses an index number based on the list of controlled commodi- 
ties as it stood in September, 191 8, and compares the relative 
movement of controlled and uncontrolled prices from August, 
1 91 6, to that date. It necessarily treats some commodities 
as controlled before they were actually under control. In 
the second method the prices of commodities under control 



THE UNITED STATES 1 87 

in any given month are compared with the prices of the same 
commodities in the previous month and the percentage of 
change is indicated. This month to month comparison per- 
mits price fixed commodities to be kept strictly in date with 
price fixing. 

In the following table the index number of controlled prices 
is constructed from the prices of 78 commodities which by 
September, 191 8, had come under control. The index number 
of uncontrolled prices is built on quotations for 193 commodi- 
ties. In both cases the commodities used are those repre- 
sented in the Bureau of Labor Statistics Index Number of 
Wholesale Prices.^ 

INDEX NUMBERS OF ALL COMMODITIES 

Average Prices August, 1916-JuLY, 1917 = 100 

Controlled Uncontrolled Total Controlled Uncontrolled Total 

Prices Prices Prices Prices 



1916 








1917 








Aug. 


74 


83 


79 


Aug. 


119 


118 


119 


Sept. 


77 


86 


82 


Sept. 


III 


121 


117 


Oct. 


83 


88 


86 


Oct. 


103 


125 


116 


Nov. 


91 


93 


92 


Nov. 


104 


127 


117 


Dec. 


96 


93 


94 


Dec. 


104 


126 


116 


1917 








1918 








Jan. 


98 


96 


97 


Jan. 


106 


128 


119 


Feb. 


99 


lOI 


100 


Feb. 


107 


129 


119 


March 


103 


103 


103 


March 


107 


129 


120 


April 


III 


no 


III 


April 


108 


133 


122 


May 


112 


113 


117 


May 


109 


133 


122 


June 


123 


116 


119 


June 


109 


135 


123 


July 


123 


117 


119 


July 


III 


140 


128 










Aug. 


no 


145 


130 










Sept. 


112 


151 


134 



The next table shows the extent to which price fixing had 
progressed in the several groups of commodities in September, 
1 91 8, the relative importance of the controlled and uncon- 
trolled commodities being measured by their aggregate values 
in exchange.^ 

^ War Industries Board, Fluctuations of Controlled and Uncontrolled Prices, p. 8. 
2 Ihid., p. 3. 



PRICES AND PRICE CONTROL DURING THE WAR 



EXTENT OF PRICE FIXING IN SEPTEMBER, 1918 



Group 



All Commodities 

Group I — Farm Products 

Group 11 — Food, etc 

Group III — Cloths and Clothing 

Group IV — Fuel and Lighting 

Group V — Metals and Metal Products. 
Group VI — Lumber and Building Mate- 
rials 

Group VII — Drugs and Chemicals . . . . 
Group VIII — House-furnishing Goods . 
Group IX — Miscellaneous 



Number of 


Relative 


Commodities 


Importance 


Con- 


Uncon- 


Con- 


Uncon- 


trolled 


trolled 


trolled 


trolled 


78 


193 


39-7% 


61.30% 


8 


22 


18.04% 


81.96% 


ID 


11 


28.22% 


71.78% 


18 


34 


41-35% 


58.65% 


8 


6 


63.44% 


36.56% 


19 


6 


83.33% 


16.17% 


9 


21 


55-71% 


44.29%) 


2 


7 


7.95% 


92.05% 





5 




100.00% 


4 


15 


17-40% 


82.60% 



The average prices of commodities by groups rose by Sep- 
tember, 191 8, as follows: 

INDEX NUMBERS, SEPTEMBER, 1918 
Average Prices August, r9i6-JuLY, 1917=100 

Controlled Uncontrolled Total for 

Group Prices Prices Group 

All Commodities 112 151 134 

Group I— Farm Products 107 168 152 

Group II — Foods 112 131 125 

Group III — Cloths and Clothing 165 147 154 

Group IV — Fuels and Lighting 99 138 no 

Group V — Metals and Metal Products. 92 130 96 
Group VI — Lumber and Building Mate- 
rials 132 159 143 

Group VII — Drugs and Chemicals . . .. 94 152 145 

Group VIII — House-furnishing Goods . o 145 145 

Group IX — Miscellaneous 131 169 142 

Retail Prices 

Reports of retail prices of food collected by the Bureau of 
Labor Statistics for June 15, 1914, and for subsequent dates, 
show the movement of these prices as affected by the war.^ 
As the table opposite indicates, the price of food as a whole in 
June, 1915, was not higher than in June, 1914; the increase 
over June, 1913, was 2 per cent; in June, 1916, the price was 
13 per cent higher than in June, 19 14. The greatest advance 
took place during the latter part of 1916 and the early months 
of 1917. The result of this was an increase in June, 1917, 
of 55 per cent over the June, 1914, price; an additional rise of 



Monthly Labor Review, August, 1918, p. 115. 



THE UNITED STATES 



189 



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190 



PRICES AND PRICE CONTROL DURING THE WAR 



73 per cent occurred from June, 1917, to June, 1918, bringing 
the total up to 66 per cent. In November, 1918, a few days 
after the conclusion of the armistice, the prices of all articles 
of food combined were 75 per cent higher than in November, 
1913.' If one considers the rise of individual commodities, 
one finds that in the five year period from June, 1913, to June, 
191 8, lamb increased 93 per cent, lard 106 per cent, and corn 
meal 139 per cent. The increase for flour was 145 per cent 
in 191 7, and 103 per cent in 191 8; however, the fluctuation 
in the price of flour was not as great as in the case of potatoes, 
which showed an increase of 256 per cent in June, 1917, and 
only 61 per cent in June, 1918. The rise in the price of meats 
varied from 65 per cent for sirloin steak to 82 per cent for 
round steak and 87 per cent for bacon. Sugar rose 72 per 
cent, bread 74 per cent, eggs 55 per cent, butter 45 per cent, 
and milk 44 per cent. 

To enable the reader to follow the percentage changes in 
prices more readily, the money prices of 16 articles of food 
have been reduced by the Bureau of Labor Statistics to rela- 
tive prices, the price of each article having been weighted 
according to the quantity consumed in the average working 
man's family. The relative figures are based on the average 
price for the year 1913.^ 

RELATIVE RETAIL PRICES OF FOOD ON 



Article 



Unit 



Sirloin steak Pound 

Round steak 

Rib roast 

Pork chops 

Bacon 

Ham 

Lard 

Hens 

Eggs Dozen 

Butter Pound 

Milk Quart 

Bread i6-oz. loaf 

Flour Pound 

Cornmeal " 

Potatoes " 

Sugar " 

All articles combined 



FOOD ON 


JUNE 


15, 


1913- 


1918 


1913 


1914 


1915 


1916 


1917 


1918 


102 


103 


103 


113 


129 


168 


lOI 


106 


105 


117 


135 


I«2 


102 


103 


103 


113 


132 


169 


99 


103 


98 


no 


148 


177 


lOI 


100 


99 


107 


158 


191 


102 


100 


97 


119 


145 


170 


100 


97 


95 


130 


177 


208 


103 


103 


98 


114 


136 


177 


92 


88 


90 


95 


123 


133 


99 


100 


98 


99 


119 


146 


100 


no 


126 


124 


170 


174 


lOI 


99 


130 


117 


246 


203 


98 


103 


109 


108 


182 


223 


104 


132 


99 


167 


366 


171 


97 


93 


126 


158 


170 


165 



99 



152 162 



^ Monthly Labor Review, January, 1919, p. 89. 
2 Ibid., August, 1918, p. 116. 



THE UNITED STATES IQI 

Retail prices vary considerably between different cities 
and it is almost impossible to arrive at any fair comparison 
of prices between such places, for instance, as New York and 
Denver, or Chicago and San Francisco. Qualities and market 
conditions vary, and the grades differ not only from city to 
city but also from store to store within the same city and 
often from month to month within the same store J This is 
true not only of food products but also of other commodities 
offered for sale. 

A very pronounced increase in retail prices of dry goods in 
different cities took place between October 15, 191 7, and 
October 15, 1918. A table prepared by the Bureau of Labor 
Statistics gives the average retail prices of ten dry goods on 
these two dates. It shows that the price of calico rose from 
13.9 cents to 26.4 cents in New York; from 10.8 cents to 25 
cents in Atlanta; from 13 cents to 35 cents in Baltimore; from 
14.2 cents to 20.4 cents in Salt Lake City, etc.; the price of 
percale advanced from 20.8 cents to 42.4 cents in New York; 
from 24.3 cents to 40 cents in Atlanta; from 23 cents to 40.9 
cents in Baltimore, and from 23.8 cents to 42.4 cents in Salt 
Lake City.^ 

Information secured by the National Industrial Conference 
Board from 112 stores in 46 cities throughout the country 
indicated that average prices of common articles of wearing 
apparel had advanced since July, 1914, to November, 1918, 
all the way from 64 per cent in the case of women's blouses to 
185.7 per cent in the case of men's overalls.^ Men's and 
women's coats which were selling for $10 in 1914 cost from $19 
to $20 in November, 1 9 1 8 . Prices of knit underwear advanced 
nearly 130 per cent. There was an increase of 68 per cent 
in the price of men's shoes and of 90.5 per cent in that of 
women's shoes. Men's shirts which cost $1 in 1914 were sell- 
ing at $1.80 in November, 191 8; the price of women's aprons 

1 Monthly Review of the Bureau of Labor Statistics, February, 1918, p. 3. 

2 Monthly Labor Review, December, 1918, pp. 101-104. Contains tables giving 
retail prices of dry goods in 45 cities. 

3 Industrial News Survey, Cost of Living Supplement, December 30, 1918- 
January 6, 1919, p. 5. 



192 PRICES AND PRICE CONTROL DURING THE WAR 

rose during the same period from 30 cents to 95 cents, the 
price of woolen skirts from $2.00 to $4.00, of house dresses 
from $1 to $1.90. 

Furnishings, especially household linens, draperies and 
other fabrics often advanced in price 100 per cent or more. 
Large increases occurred also in the price of kitchen utensils 
and furniture. The advance in the cost of tobacco has been 
placed by well known retailers at 30 per cent to 40 per cent.' 

Prices of coal secured by the Board in 38 cities and by the 
United States Fuel Administration in 21 States Indicated that 
the average price of anthracite when bought in ton lots for 
household use had risen about 45 per cent between July, 1914, 
and November, 1918. The average increase in the price of 
bituminous coal for household use was about 60 per cent. 
This comparison does not show the exact situation, since the 
summer price of coal is usually slightly lower than the winter 
price ; the true advance within the war period is somewhat less 
than the figures indicate. 

According to the data gathered by the Bureau of Labor 
Statistics, the average and relative retail prices of coal in ton 
lots for household use increased January 15, 1913, to January 
15, 1919, as follows: 2 

AVERAGE AND RELATIVE RETAIL PRICES OF COAL IN TON LOTS, 

FOR HOUSEHOLD USE 

January 15 of Each Year 1913 to 1919, Inclusive 

[Average price for year 1913= 100.] 

Pennsylvania Anthracite, White 

Ash Bituminous 

Period Stove Chestnut 

Average Relative Average Relative Average Relative 
Price Price Price Price Price Price 



Average for year, 1913 ... $7 

Jan. 15, 1913 7 

Jan. 15, 1914 7 

Jan. 15, 1915 7 

Jan. 15, 1916 7 

Jan. 15, 1917 9 

Jan. 15, 1918 9 

Jan. 15, 1919 II 



73 100 $7.91 100 $5 

99 103 8.15 103 5 

80 loi 8.00 lOI 5 

83 loi 7.99 loi 5 

93 103 8.13 103 5 

29 120 9.40 119 6 

88 128 10.03 127 7 

52 149 II. 61 147 7 



41 100 

48 lOI 

97 no 

71 106 

69 105 

96 129 

68 142 

90 146 



^Industrial News Survey, Cost of Living Supplement, December 30,1918-Jan- 
uary 6, 1919, p. 7. 
^ Monthly Labor Review, March, 1919, p. loi. 



THE UNITED STATES 1 93 

As may be noted In the table the first big advance in the price 
of all kinds of coal came during the period from January 15, 
1917, to January 15, 1918. From January 15, 1918, to Janu- 
ary 15, 1919, the average price of bituminous coal rose but 
slightly, from $7.68 to $7.90; the price of anthracite during the 
same time advanced for stove size, from $9.88 to $11.52, and 
for chestnut from $10.03 to $11.61. 

From data furnished by chambers of commerce, real estate 
boards and brokers, and charitable and civic organizations 
in nearly 100 cities, the Industrial Conference Board came to 
the conclusion that rent rose throughout the country approxi- 
mately 20 per cent. There were marked local variations in 
rent changes. 



CHAPTER II 
Wages and Cost of Living 

Wages 

There are In the United States no comprehensive wage 
statistics for the entire country comparable with the price 
statistics of the Bureau of Labor. The meager evidence 
which is available shows that wage advances since the begin- 
ning of the war have been very uneven, varying according to 
districts and occupations and fluctuating from 6 per cent for 
daytime newspaper compositors and linotype operators, to 
105 per cent for blacksmiths (shipyards, Delaware River).' 
While advances from 40 to 75 per cent have been common in 
such types of labor as metal workers and workers in textile 
mills and shoe factories, many classes of laborers, as, for 
instance, bakers, bricklayers, motormen and conductors on 
street railways, have received increases not in excess of 10 
to 20 per cent. The above data were secured by Messrs. Hugh 
S. Hanna and W. Sett Lauck from records and reports of 
federal and State departments, and from trade and labor 
publications. In an interesting study on "Wages and the 
War" they brought out the facts that from the beginning of 
the war to the close of 191 7, "there has been absolutely no 
uniformity in the degree of increase" in rates of labor com- 
pensation, and that "the great advances had taken place in 
those lines of industry for the products of which the war had 
created a special demand. "^ Many individual workers, of 
course, profited by transferring themselves to those industries 
where the demand for labor was great and where an important 

'■American Economic Association. Report of the Committee on War Finance, 
pp. 105-107; also Monthly Review of the Bureau of Labor Statistics, March, 1918, 
pp. 135-136. 

2 Hugh S. Hanna and W. Sett Lauck: Wages and the War: A Summary of 
Recent Wage Movements, Monthly Labor Review, March, 19 18. 

194 



THE UNITED STATES 



195 



advance in wages took place. An Idea as to what were the 

changes in relative wages and earnings in December, 191 7, 
as compared with 19 14-15 may be gained from the following 
table :^ 

RELATIVE WAGES IN LEADING OCCUPATIONS, DECEMBER, 1917, 
COMPARED WITH 1914-15 
1914-15=100 

1917 Com- 
pared with 
1914-15 

Compositors and linotype operators (newspapers, day) lo6 

Electrotypers (finishers) iii 

Hod carriers (plaster tending) 112 

Plumbers and gas fitters (building trades) 113 

Structural-iron workers (building trades) 113 

Steam fitters (building trades) 114 

Motormen and conductors (street railways) 115 

Sheet-metal workers (building trades) 116 

Mining (anthracite) 118 

Inside wiremen (building trades) 120 

Blacksmiths (railroad shops, southeastern) 123 

Boiler makers (railroad shops, southeastern) 124 

Longshoremen (New York) 125 

Machinists (navy yard, Philadelphia) 126 

Machinists (railroad shops, southeastern) ....._ 129 

Pick mining, bituminous (Hocking Valley district) 130 

Ship smiths (navy yard, Philadelphia) 134 

Ship fitters (navy yard, Philadelphia) 136 

Pipe fitters (navy yard, Philadelphia) 137 

New York State, average (weekly earnings) 139 

Silk industry (earnings) 140 

Riveters, chippers, and calkers (shipyard, Washington, Oregon) 144 

Blacksmiths (shipyard, San Francisco) 144 

Machinists (shipyard, San Francisco) 144 

Electricians (shipyard, San Francisco) _ 144 

Shipwrights, joiners, boatmen, millmen (shipyard, San Francisco) . . . 147 

Machine mining, bituminous (Hocking Valley district) 149 

Cotton finishing manufacturing (earnings) 153 

Hosiery and underwear manufacturing (earnings) 157 

Common labor (iron and steel) 160 

Blast furnaces (iron and steel) 161 

Loftsmen (shipyards, Delaware River) 165 

Electricians (shipyards, Delaware River) . 165 

Sheet-metal workers (shipyard, San Francisco) 165 

Cotton manufacturing (earnings) 165 

Open hearths (iron and steel) ■ • 167 

Sheet-metal workers (shipyards, Delaware River) 167 

Machinists (shipyards, Delaware River) 167 

Woolen manufacturing' (earnings) 170 

Riveters (shipyards, Delaware River) I75 

Inside labor (most occupations), bituminous (Hocking Valley) 176 

Boot and shoe industry (earnings) I77 

Holders-on (shipyards, Delaware River) I97 

Blacksmiths (shipyards, Delaware River) 205 

^Hugh S. Hanna and W. Sett Lauck: op. cit., p. 136. 



196 PRICES AND PRICE CONTROL DURING THE WAR 

According to the Information in the possession of the Bureau 
of Labor Statistics, the per capita earnings in the iron and steel 
plants of the country were 88 per cent higher in October, 
191 7, than in January, 191 5. By departments the increases 
in the average earnings per hour, in September, 191 7, as 
compared with May, 1915, were as follows: in blast furnaces, 
52 per cent; in Bessemer converters, 58 per cent; in open 
hearth furnaces, 38 per cent; in blooming mills, 35 per cent; 
in plate mills, 50 per cent; and in sheet mills, 95 per cent. An 
additional ten per cent increase was granted by most com- 
panies in October, 191 7.' 

Generally speaking, increases in wages were greater In those 
trades and localities which were poorly organized; this was 
due largely to the fact that they were, as a rule, previously on 
a much lower level of compensation. Much smaller advances 
on the average are shown by the figures for union wage scales. 
Taking the rates for 1913 as 100, these figures give the In- 
creases In the rates of wages per hour as follows i^ 

1913 100 

1914 102 

1915 103 

1916 107 

1917 114 

For agricultural laborers the increase In average wages per 
month was : ^ 

Section W 

19 

North Atlantic $33 

South Atlantic 19 

North Central east of Mississippi River. . . 31 

North Central west of Mississippi River. . . 35 

South Central 21 

Far Western 46 

United States 27 

It Is difficult to arrive at* any definite conclusion as to 
what was the actual Increase In the rates of wages from the 

1 N. C. Adams: "Wages and Hours of Labor in the Iron and Steel Industry, 
September, 1917, compared with May, 1915," Monthly Review of the U. S. Bureau 
of Labor Statistics, March, 1918, p. 29. 

2 Monthly Labor Review, June, 1918, p. 146. 

3 Monthly Crop Report, March, 1918, quoted from the report of the Commit- 
tee on War Finance, American Economic Association, p. 105. 



Average 




Rate of In- 


ages per Month 


crease Per 


ID 1917 


Cent 


.19 $48.06 


45 


■75 30 


80 


56 


.81 44 


98 


41 


■45 49 


46 


40 


■90 31 


07 


42 


.48 63 


59 


37 


.50 40 


43 


47 



THE UNITED STATES I97 

beginning of the war to the end of 1918; it does not seem 
that wages rose as rapidly as the prices of commodities. 
However, a mere study of the rates of wages is not sufHcient 
for the determination of the changes in the standard of Hving 
and in the general welfare of the laborers; there are many 
other factors to be taken into account, such as reduced amount 
of unemployment, opportunity for going into higher paid 
occupations, overtime work with extra pay, employment of 
additional members of the family, additional expenses of the 
household for transportation, board, etc. 

The purchasing power of union wages measured by retail 
prices of food is given by the Bureau of Labor Statistics as 
having declined as follows:' 

The wage figures are for May of each year. 

Purchasing Power Measured by Retail 
Prices of Food 
Year Of Rates of Wages Of Rates of Wages 

1913 

1914 

1915 

1916 

1917 

1918 

The table shows that an hour's wages in 191 8 purchased 
but 79 per cent as much food as in 191 3 and a week's wages 
but 'Jl per cent as much. 

Cost of Living 

The increase in the cost of food in the United States in the 
opinion of the Food Administration has been greatly over- 
estimated by laying too much emphasis on special cases. A 
computation of the nation's food bill prepared by the Ad- 
ministration for each three months, beginning with the 
second quarter of 191 7, down to the second quarter of 191 8 
showed the following results i^ 

1 Monthly Labor Review, March, 1919, p. II9- 

2 Official Statement of the U. S. Food Administration, October i, 1918, p. 5. 



per Hour 


per 


Week, Full Time 


100 




100 


100 
lOI 




99 

lOI 


94 
78 
79 




93 

11 
11 



198 



PRICES AND PRICE CONTROL DURING THE WAR 



THE NATION'S FOOD BILL 



Breadstuffs 

Vegetables 

Sugar 

Fruits 

Oils and nuts .... 

Fish 

Meats 

Poultry and eggs . 
Dairy products . . 



Breadstuffs 

Vegetables 

Sugar 

Fruits 

Oils and nuts. . . . 

Fish 

Meats 

Poultry and eggs . 
Dairy products . . 



Breadstuffs 

Vegetables 

Sugar 

Fruits 

Oils and nuts . . . . 

Fish 

Meats 

Poultry and eggs . 
Dairy products . . 



2d Quarter, 


191 


7 


3d Quarter, ic 


»i7 


Total Cost 


Cost per 


Total Cost 


Cost per 


in Dollars 


Capita 


in Dollars 


Capita 


$314,906,915 


$3 0383 


$393,732,314 


$3.7844 


330,709,747 


3 


1905 


152,884,830 


I 


4694 


200,674,663 


I 


9363 


205,527,930 


I 


9754 


78,361,156 




7559 


71,290,290 




6852 


52,302,765 




5046 


58,304,496 




5604 


26,140,445 




2522 


26,326,613 




2530 


764,882,651 


7 


3804 


777,233,981 


7 


4705 


221,956,895 


2 


1417 


226,038,723 


2 


1726 


573,665,667 


5 


5354 


584,068,67^ 


i 


5 


6138 


$2,563,600,904 


S24.7353 


$2,495,407,855 


523.9847 


4th Quarter, 191 7 


1st Quarter 


, 1918 


Total Cost 


Cost per 


Total Cost 


Cost per 


in Dollars 


Capita 


in Dollars 


Capita 


$348,554,753 


$3-3372 


$351,952,618 


$3-3567 


136,899,969 


1.3107 


143,179,060 


I 


3655 


210,439,897 


2 .0148 


190,016,407 


I 


8122 


70,506,614 


.6750 


75,057,007 




7158 


68,495,873 


.6558 


72,652,456 




6929 


33,133,947 


.3172 


40,631,802 




3875 


878,708,620 


8.4131 


838,387,663 


7 


9961 


266,500,892 


2.5516 


304,216,881 


2 


9014 


641,510,693 


6. 142 1 

$25-4175 


676,389,4i( 




6 


4510 


$2,654,751,258 


$2,692,483,304 


525.6791 


2d Quarter 


, 1918 


Per Cent Increase or 


Total Cost 


Cost per 


Decrease over 2d 


in Dollars 


Capita 


Quarter, i 


317 


$349,626,283 


$3.3216 


+ 9-3 




123,903,476 


I 


1768 


-63 


I 




188,723,860 


I 


7930 


- 7 


4 




103,881,429 




9868 


+30 


5 




81,964,541 




7786 


+54 


3 




24,732,401 




2349 


- 6 


9 




938,789,266 


8 


9192 


+20 


8 




262,577,561 


2 


4947 


+ 16 


5 




619,553,054 


5.8863 


+ 6.3 







Total $2,693,751,871 $25.5919 



+ 3.5 



The above table is based on taking the total food consumed 
by the nation divided into the items of breadstuffs, vegetables, 
meat, etc., at the average wholesale price for the quarter and 
thus arriving at what the nation as a whole actually expended. 
The increase according to this table was from our entry into 
the war to the second quarter of 1918 from $2,563,600,904 
to $2,693,717,871, or 3^ per cent. There had been many local 
variations, prices having increased to a larger per cent where 
there had been an increase in population; on the other hand, 



THE UNITED STATES 1 99 

there were corresponding sections of the community where 
actual decreases or no increases had taken place. According 
to the Food Administration's statement, the cost of rent, 
clothing, transportation and other Items of living advanced 
several times as much as the aggregate increase In the cost of 
foodstuffs. 

It is surprising that the Food Administration should have 
used wholesale prices for the purpose of presenting the nation's 
food bill. The value of the whole compilation as an Indicator 
of changes In the cost of living is very doubtful. It certainly 
does not reflect actual conditions. Retail prices alone can be 
used with any degree of accuracy In order to measure changes 
in the cost of living and even retail prices are an uncertain 
guide unless one ascertains the relative Importance of each 
item in the family budget. 

The National Industrial Conference Board, which in esti- 
mating changes in the cost of food relied chiefly upon the 
figures collected monthly by the United States Bureau of 
Labor Statistics, arrived at the conclusion that the increase 
in the cost of food entering into the family budget was between 
July, 1914, and the middle of June, 1918, 62 per cent, as com- 
pared with an Increase of 15 per cent for rent, ']'] per cent for 
clothing, 45 per cent for fuel and light and 50 per cent for 
sundries (Including such items as recreation, furniture, reading 
material, tobacco, etc.). The Increases In cost between July, 
1914, and November, 1918, of the Items entering Into the 
family budget were:^ 

Food 83% 

Shelter 20 

Clothing 93 

Fuel and light 55 

Sundries 55 

The Increase for the budget as a whole was 65.9 per cent. 

In combining the percentages of increase for the respective 
items, in order to determine the average increase for the total 
budget, food was taken as constituting 43 per cent of the 

1 Industrial News Survey, Cost of Living Supplement, August 19-26, 1918, p. i; 
December 30-January 6, 1919, p. i. 
14 



200 PRICES AND PRICE CONTROL DURING THE WAR 

family expenditure, rent i8 per cent, clothing 13 per cent, 
fuel and light 6 per cent, and sundries 20 per cent. 

The budgets considered were those of wage earners in repre- 
sentative industrial communities. 

A brief submitted to the Director General of Railroads by 

the Brotherhood of Locomotive Firemen and Engineers in 

connection with their demands for increased wages contains 

some valuable cost of living data, which show the cost of 

specified items of expenditure in the working men's budget 

in 1900, and an estimated cost of similar budgets in 191 1, 

1914 and 191 7. The budget of 1900 is based upon the average 

expenditure of 2,567 families, as ascertained by the United 

States Bureau of Labor Statistics and published in its report 

on cost of living (i8th Annual Report, 1903). The figures 

for 1 911, 1914 and 191 7 are obtained by applying to the 

principal items of the 1900 budget the percentages of increase 

in those years as compared with 1900. According to these 

estimates, the total expenditure per family increased 43 per 

cent from 1914 to 1917.' 

ESTIMATED WORKING MEN'S BUDGETS IN 1911, 1914, AND 1917, AS 
COMPARED WITH 1900 
Average 
Expendi- 
ture of 2,567 Estimated Average Expenditures 
Items of Expenditure Working of a Working Man's Family in — 
Men's Fami- 
lies in 1900 191 1 1914 1917 

Food $32700 $430.00 $477 -oo $716.00 

Rent 100.00 13300 132.00 15900 

Mortgages 12.00 12.00 12.00 12.00 

Fuel and lighting 40 . 00 40 . 00 46 . 00 82 . 00 

Clothing 108.00 120.00 121.00 210.00 

Taxes 6.00 6.00 6.00 6.00 

Insurance 21.00 21.00 21.00 21.00 

Organizations 900 9.00 9.00 9.00 

Religious purposes 8.00 8.00 8.00 8.00 

Charity 3-00 3.00 3.00 3.00 

Furniture and utensils 26.00 26.00 30.00 39-00 

Books, newspapers 8 .00 8 .00 8 .00 9 .00 

Amusements, vacation 12.00 12.00 12.00 13 -OO 

Liquors 12.00 12.00 12.00 14.00 

Tobacco 11.00 11.00 11.00 12.00 

Sickness, death 21.00 21.00 21.00 21.00 

Other purposes 45-00 51 -OO 50.00 67.00 

Total 769.00 923.00 979.00 1,401.00 

1 Monthly Review of the Bureau of Labor Statistics, April, 1918, p. 192. 



THE UNITED STATES 201 

An Investigation by the Bureau of Labor of the changes in 
retail prices in connection with the cost of Hving in shipbuild- 
ing centers of the country showed that the percentages of 
increase in these centers were greater than the findings of 
the Industrial Board or of the Brotherhood of Locomotive 
Firemen and Engineers indicate for the country as a whole. 
The per cent of increase in December, 1918, over December, 
1914, was, in a family budget for Philadelphia: food, 83.35 
per cent; clothing, 111.16 per cent; housing, 8 per cent; fuel 
and light, 47.94 per cent; furniture and furnishings, 107.69 
per cent; miscellaneous, 67.47 per cent; all items, 75.02. The 
increase for the total budget in New York was 78.79 per cent; 
in Baltimore, 86.37; in Seattle, 70.47; in Chicago, 74.14; in 
San Francisco and Oakland, 58.38.' 

A number of other local investigations into the increase in 
the cost of living were made from time to time; such was, 
for instance, an investigation by a committee of employes of 
the Bankers Trust Company of New York, which came to 
the conclusion that retail prices of food had risen 60 per cent 
between 1915 and June 30, 1918.^ The Bureau of Labor of 
the State of Washington placed the increase in the cost of 
groceries, meat and fish between April, 1914, and April, 1918, 
at 51 per cent in Seattle, 47 per cent in Tacoma and 55 per 
cent in Spokane. 

As to any definite conclusions regarding increased cost of 
living and the effect of this increase upon the status of the 
working man and his family, one may subscribe without reser- 
vation to the statements of the United States Commissioner 
of Labor Statistics, that "after all these years of investigation 
and statistical toil in the cost of living field, we don't know 
clearly the difference between the higher cost of living and 
the costs of higher living," and that ''we can not, to save our 
lives, tell whether the Seattle family with an income of 
$1,569.10 is better or worse off than the New York family 

1 Monthly Labor Review, May, 1919, pp. 166-168. 

2 Industrial News Survey, Cost of Living Supplement, August 19-26, 1918, p. 4. 



202 PRICES AND PRICE CONTROL DURING THE WAR 

with $1,348.64 income. We do know that most workmen's 
famiHes spend all their income. Does it mean that American 
families are extravagant or does it mean that they are living 
at or below the margin of decency and health?"^ 

^ Royal Meeker: "The Possibility of Compiling a Cost of Living Index," 
Monthly Labor Review, March, 1918, p. 7. 



CHAPTER III 

Legislation Authorizing Price Fixing and Price Fixing 

Agencies 

The National Defense Act, approved June 3, 1916, gave the 
President power to fix prices at which materials could be 
purchased for the use of the government. There was some 
question as to whether his power extended to the materials 
to be used by the Allies, but the consensus of legal opinion 
was that the power applied that far. To the War Depart- 
ment was delegated the authority to require that manu- 
facturers of arms, ammunitions, supplies and equipment for 
the army should sell their products at a reasonable price, 
agreed upon by the Department. 

Similar authority was given by the law of March 4, 191 7, 
to the Navy Department; the law referred to ships and war 
materials for the navy; it differed from the act dealing with 
the army's requirements In that It provided that If the owner 
was not satisfied with the compensation fixed by the Presi- 
dent he could accept fifty per cent and have the actual amount 
to which he was entitled ascertained by the courts.^ 

When In June, 19 17, special appropriations were made for 
use by the Shipping Board in acquiring merchant vessels, the 
President was given powers to place orders for the construc- 
tion of merchant ships at prices considered by him as reason- 
able. He was also empowered to requisition shipbuilding 
plants, as well as merchant vessels which were under construc- 
tion in American yards, charters for merchant vessels, etc. 
Those who felt dissatisfied with the compensation allowed by 
the President could accept seventy-five per cent of this 
compensation, leaving the proper amount to be decided by 
the federal courts. 

1 Chamber of Commerce of the U. S. Referendum No. 22 on the Report of the 
Special Committee on Control of Prices during the War, p. 12. 

203 



204 PRICES AND PRICE CONTROL DURING THE WAR 

The first agreements as to prices between governmental 
agencies and producers can be traced to the Council of 
National Defense and its Advisory Commission, both of 
which were created in a section of the Army Appropriation 
Act, approved August 29, 1916. The council was established 
to study the industrial and transportation systems of the 
United States and to make recommendations as to the best 
methods which might be utilized in case of some possible 
future war. The Advisory Commission, consisting of seven 
industrial or commercial experts, was to guide the council 
in this work.' ] 

The commission divided itself into seven committees, two 
of which, the one on supplies, with Julius Rosenwald as chair- 
man, and the other on raw materials, minerals and metals, 
under the chairmanship of Bernard M. Baruch, soon assumed, 
in addition to their advisory functions, a large place in the 
actual administration of the affairs of the contracting depart- 
ments. ^ Although having to contend with a certain amount 
of opposition to their activities from the military officials in 
charge of various bureaus, they succeeded in inaugurating the 
policy of personal conferences at Washington with manu- 
facturers and producers of essential commodities. As a result 
of such conferences, informal price agreements were entered 
into, the effect of which was "not only to save the govern- 
ment a great deal of money" but also to prevent wholesale 
open market bidding by government bureaus, which would 
have caused great price stimulation and which would have 
led to a more rapid advance in prices than took place at the 
time. This method of agreements was used extensively in 
the subsequent fixing of prices by the War Industries Board, 
which was established on July 28, 191 7, to succeed the Gen- 
eral Munitions Board. The latter was created early in 1917 
^as the first attempt at a coordinating agency to counteract 
the tendency on the part of the purchasing bureaus of the War 

1 C. N. Hitchcock: "The War Industries Board," Journal of Political Economy, 
June, I9i8,p. 548. 
^ Ibid., p. 551. 



THE UNITED STATES 2O5 

Department to bid against each other for supplies and ma- 
terials. The board had also the task of planning for the 
production of munitions. It gave particular attention to the 
question of prices. Notwithstanding the energetic efforts as 
well as the tact and diplomacy of Frank A. Scott, the chair- 
man of the board, the lack of adequate powers and the loose 
organization of the board prevented it from being of much 
service. The initiative and the final decisions continued to rest 
with the heads of the War Department bureaus, who merely 
consulted the board "when time permitted." The Muni- 
tions Board, despite its manifest weaknesses, served in a 
limited measure as a clearing house for orders, thus preventing 
the more flagrant cases of competition between different 
bureaus and giving an opportunity for common counsel on 
questions of price. v 

/'^The War Industries Board, like the Munitions Board, 
which it succeeded,;!, derived its power from the Council of 
National Defense. One of the functions of the new board, in 
the words of the statement which created it, was to "consider 
price factors." As the council itself had no authority to fix 
prices, it could not delegate any such authority to the board. J 

The Price Fixing Committee of the War Industries Board 
was not created until March 14, 1918. Its functions w^ere 
made independent of those of the board, and it could report 
directly to the President. 

The articles dealt with by the Price Fixing Committee in- 
cluded iron and steel, copper, lumber, hides and leather, wool, 
cotton fabrics, nickel, aluminum, quicksilver, zinc, nitric and 
sulphuric acid, cement, hollow tiles, brick, sand and gravel. 
Thus, its scope was of wide range with regard to articles 
affected. The reason why all these commodities were brought 
under control may be found in the war needs for great quan- 
tities of each of these articles. Almost the entire supply of 
some of them was sought either by the United States Govern- 
ment or by the Government of the Allies. 

The primary function of the Price Fixing Committee was 
the protection of the interests of the government. Private 



206 PRICES AND PRICE CONTROL DURING THE WAR 

consumers were considered only in so far as the principle of 
one price for all was adhered to in the committee's agreements 
with various producers. The committee's regulations never 
extended to retail dealers and only in a small degree to 
wholesalers.' 

The regulation of prices after the United States entered 
the war was carried on by two other agencies: the Food 
Administration and the Fuel Administration. They were 
both established in order to administer the provisions of the 
Lever Food Control Act. Unlike the Price Fixing Committee 
of the War Industries Board both the Food Administration 
and the Fuel Administration undertook to regulate prices 
all the way from producer to consumer. This was done by 
means of fixing basic prices as well as by establishing maximum 
margins for the middlemen. 

The Food Control Act 

Various food bills had been submitted to both houses of 
Congress since April 2, 191 7, Of all these bills two have been 
drafted in committee and after having been introduced twice 
in different forms, passed both branches of legislature. The 
first of these, the Food Survey, or Production Bill, provided 
merely for an investigation of food conditions; it was enacted 
without much opposition. The second bill, the Lever Food 
Control Bill, after weeks of delay, was reported on June 13, 
19 1 7, by the House Committee on Agriculture for favorable 
action. This bill gave rise to very bitter debates both in the 
House and in the Senate. 

The opponents of the bill attacked it as being entirely out 
of place in a "republic of freemen" (Senator Reed of Missouri). ^ 
Senator Gore denounced it as the "sweepings" of all the Brit- 
ish and Canadian food acts and orders in council, and declared 
that if passed "It would cause losses to producers (in 191 7) 
of $250,000,000 in wheat and $500,000,000 in corn and result 

1 F. W. Taussig: "Price Fixing as Seen by a Price Fixer," Quarterly Journal of 
Economics, February, 1919, p. 208. 

^ The Literary Digest, June 30, 191 7, p. 1976. 



THE UNITED STATES 20/ 

in famine next year through reduced production." Senator 
Gore sought to amend rather than defeat the bill. He, like 
the majority of the bill's opponents, felt that the situation 
required some government action, but he objected to an act 
which according to him was placing too much power in the 
hands of one man. 

One of the most vicious press attacks on the measure 
appeared in the New York Evening Sun which held the pro- 
posed food legislation of extreme danger to the country be- 
cause it was bound to produce the very evils it pretended to 
avert, namely, "reduced production, chaos in marketing, the 
withdrawal of capital and expert skill from the food trades, 
panicky buying, high prices and grievous shortage at the 
points of consumption." According to this paper the bill was 
bound to erect an all-pervasive despotism which would cover 
the land, the factory, the mart and the home. 

President Wilson in recommending the adoption of the 
measure stated that its object was not to control the food of 
the country, but to release it from the control of speculators 
and other persons who will seek to make inordinate profits. 
Secretary of Agriculture Houston defined as the purposes 
of the bill "to facilitate and clear the channels of distribu- 
tion, prevent hoarding, assure fair prices, restrain injurious 
speculation, prohibit evil practices on exchanges, protect the 
public against corners and extortions and reduce waste."' 

As finally passed on August 8, 191 7, the bill embodied most 
of the provisions which President Wilson requested. The 
proposed amendment providing for a three-man food admin- 
istration instead of one administrator was defeated as were 
also many other amendments aiming at the curtailment of 
the powers of the food controller. 

The most important provisions of the Food Control Act 
(H. R. 4961) as they applied to price regulation were: 

Section i provided for the establishment of governmental 
control over the supply, distribution and movement of food, 
feeds, fuel, and fertilizer and fertilizer ingredients, tools, 

^ The Literary Digest, June 30, 1917, p. 1976. 



208 PRICES AND PRICE CONTROL DURING THE WAR 

utensils, implements, machinery and equipment required for 
the production of foods, feeds and fuels. All commodities 
mentioned were called necessaries. 

Section 4 made it unlawful for any person wilfully to destroy 
any necessaries for the purpose of enhancing the price or re- 
stricting the supply thereof; knowingly to commit waste or 
wilfully to permit preventable deterioration of any necessaries; 
to hoard, to monopolize or attempt to monopolize necessaries; 
to make unjust, or unreasonable charges in handling or deal- 
ing with necessaries. It was forbidden to combine, conspire or 
agree with any other person to restrict the supply, distribution 
or manufacture of necessaries in order to enhance the price. 

Section 5 gave the President authority to license the im- 
portation, manufacture, storage, mining or distribution of any 
necessaries. No one but licensees were permitted to engage 
in these activities, exception having been made for producers 
of agricultural products, cooperative societies dealing with 
agricultural products produced by their members, retailers 
whose business was less than $100,000 per annum and common 
carriers. 

Section 6 provided that necessaries shall not be hoarded 
beyond the reasonable requirements of the individual or 
business. 

Section 10 authorized the President to purchase, store and 
provide storage facilities for and to sell at reasonable prices 
wheat, flour, meal, beans and potatoes. 

Section 12 provided for the taking over and operation by 
the government of any factory, packing house, pipe line, mine 
or other plant, in which necessaries were mxanufactured or 
mined, if such action was deemed necessary to secure an ade- 
quate supply of necessaries for the army and navy or for other 
public use. 

Section 13 authorized the President to prescribe regulations 
for the exchanges, boards of trade and similar organizations, 
dealing in necessaries, should he find such regulations neces- 
sary in order to prevent enhancement, depression, fluctuation 
of prices or injurious speculation and manipulation. 



. THE UNITED STATES 2O9 

Section 14 provided that should the President find an 
emergency existing requiring stimulation of the production 
of wheat, he could guarantee for a period not exceeding 18 
months a price which would ensure producers a reasonable 
profit; No. i northern spring wheat at the principal interior 
markets was made the basis upon which the guaranty for the 
various crops was to be calculated. A guaranteed price of $2 
a bushel for No. i northern spring wheat was established for 
the crop of 191 8. The President was given authority to in- 
crease the import duties on necessaries should he find this 
advisable to prevent undue importation from other countries. 

Section 19 appropriated $150,000,000 to be used in carrying 
out the business operations authorized by the act. 

Section 24 provided that the act should cease to operate at 
the termination of the war between the United States and 
Germany. 

Section 25 gave the President most comprehensive powers in 
regard to the production and dealing in coal and coke. He 
was authorized to fix the price of coal and coke, wherever and 
whenever sold; he could requisition and take over the plant, 
business and appurtenances of any producer or dealer who 
failed to conform to the imposed prices and regulations. If 
he thought it necessary for the successful prosecution of the 
war, he could require that the total output of coal should be 
sold exclusively to the United States, to be resold by govern- 
ment agencies. To make the provisions of the act effective, 
the Federal Trade Commission was authorized to make a full 
inquiry into the management and costs of coal and coke, in 
order that the President might fix the maximum price for the 
coal and coke of any locality. 

The Food Administration 

While the Food Administration had no authority to fix 
prices by decree, it could effectively regulate them through the 
system of licensing dealers in foodstuffs, through the control 
of food buying for the army, the navy and the Allies, and 



210 PRICES AND PRICE CONTROL DURING THE WAR 

through the power of preventing hoarding, speculation and 
the taking of unreasonable profits. 

The Food Administration had from the very outset of its 
activities set before itself as one of its main tasks the attaining 
of price stability in the essential commodities. Mr. Hoover 
realized the necessity of stimulating production on one hand 
and of enforcing conservation on the other, but he did not 
believe that these two aims could best be served by "a run- 
away market and by exorbitant prices." His first public 
statement after his appointment as Food Administrator thus 
defined the work before him: "to so guide the trade in the 
fundamental food commodities as to eliminate vicious specu- 
lation, extortion and wasteful practices and to stabilize prices 
in the essential staples."' 

Two methods were open for the purpose of carrying into 
effect the provisions of the Food Control Act: (i) recourse 
to criminal proceedings, (2) administrative action, i.e., revo- 
cations of license, temporary suspensions, requisitions, etc. 
The general attitude of the Food Administration towards 
the offender has been that penalties were less Important than 
securing compliance with the Administration's policies. ^ 

The comparative success of the Food Administration In 
dealing with the countless and complex problems which were 
involved in the stimulation of production, prevention of hoard- 
ing and of speculation, stabilization of prices, equalization of 
distribution and enforcement of conservation may be attrib- 
uted to the great skill with which Mr. Hoover organized his 
administration and to his understanding of the psychology of 
the American people aroused by the demands of the war.^ 
Mr. Hoover has shown that It is possible to have a bureau- 
cratic machine without Its concomitant defects of unwieldi- 
ness and of rigidity. His office had none of the traits of the 
conventional Washington office.^ While in the Food Admin- 
istration there were as many subordinate bureaus as perhaps 

^ C. R. Van Hise: Conservation and Regulation, Part ii, p. 83. 

' Ofificial Statement of the U. S. Food Administration, June 6, 1918, p. i. 

' "Hoover, His Food Administration," Review of Reviews, p. 283. 

* C. Merz: "Strategy in Food," The New Republic, January 26, 1918. 



THE UNITED STATES 211 

in any other organization in Washington, these bureaus were 
called merely "divisions"; they appeared and disappeared as 
the occasion demanded, and the chiefs of these divisions passed 
from one responsible position to another wherever they could 
be most genuinely useful. Because of its flexibility, the Food 
Administration possessed the facility of rapidly adapting 
itself to any new situation and of being able to handle the 
work expeditiously. 

Mr. Hoover sought and in most instances obtained the 
voluntary cooperation of the representatives of various busi- 
ness interests which were placed under his control. Most of 
the measures passed by him were the result of his confer- 
ences with those who were to be affected by his regulations, 
and most of the important positions in the Food Adminis- 
tration were entrusted to successful organizers and adminis- 
trators of private business enterprises. Mr. Hoover was 
careful to make it clear from the very beginning of his activi- 
ties that he did not wish to disturb the normal channels of 
business, that he did not contemplate to supplant any eco- 
nomic factors which were performing a useful function. 
Realizing the futility of attempting to solve in one central 
organization the manifold and pressing problems of produc- 
tion and distribution of foodstuffs throughout all parts of the 
country, he enlisted the services of every State and munici- 
pality in the union. Each State was placed under the super- 
vision of a Federal Food Administrator who was appointed 
by the President upon Mr. Hoover's recommendation. Like 
Mr. Hoover, these officials were volunteers, receiving no pay 
for their services. Administrators were also appointed for 
each county in the State; the county administrators, in their 
turn, organized special committees to look after the food 
problems in every city and township. 

Mr. Hoover constantly objected to the introduction of a 
system of compulsory rationing. His objections were based 
on the following grounds: (i) fifty per cent of the population 
in the United States are either producers or live in intimate 
contact with the producers and therefore can not be restrained 



212 PRICES AND PRICE CONTROL DURING THE WAR 

in their consumption by any system of rationing ; (2) the habits 
of consumption of the American population with regard to 
any given commodity vary considerably in different parts of 
the country; thus while the northern worker consumes about 
eight pounds of wheat products a week, the southern worker 
does not require more than two pounds of such products. 
The rationing of wheat on any broad national lines would 
increase the consumption beyond necessity in the south, while 
in the north it would decrease it below necessity. (3) Restric- 
tion of consumption of the very poor is undesirable, as its 
consumption is not above what is strictly necessary for the 
maintenance of health and strength of these people; (4) com- 
pulsory rationing would mean an annual cost of from $10,000,- 
000 to $15,000,000 to the government; it will mean the 
issuance of tickets and coupons to every householder, the 
maintenance of a vast administrative organization which 
would have to see to it that the rates are enforced and obeyed. 

The Licensing System and the Control of Margins 

The first proclamation issued by the President under the 
licensing power granted to him by the Food Control Act 
applied to the owners, lessees or operators of wheat or rye 
elevators and to all persons, firms, corporations and associa- 
tions engaged in the business of manufacturing any products 
derived from wheat or rye (except those operating mills and 
manufacturing plants of a daily capacity of one hundred bar- 
rels or less and farmers and cooperative associations of 
farmers). This proclamation was issued on August 14, 191 7, 
to become effective on September i, 191 7, after which date 
no one was allowed to engage in the wheat and rye warehous- 
ing or manufacturing business without having previously 
secured a license.^ The next interests brought under the 
licensing control were the importers, manufacturers and re- 
finers of sugar, sugar syrups and molasses ; they were required 
to secure a license on or before October i, 1917.^ 

^ U. S. Food Administration, Proclamation and Executive Orders by the President, 
p. 6. 

2 Ibid., p. 7. 



THE UNITED STATES 21 3 

A more far-reaching measure was passed on October 8, 
1917. It established a Hcensing system to go into effect on 
November i, which gave the Food Administration power to 
eft'ectively regulate the activities of all persons engaged in 
the importation, manufacture, storage and distribution of 
certain basic foodstuffs. The commodities enumerated in 
the new proclamation were: 

Wheat, wheat flour, rye or rye flour, 

Barley or barley flour, 

Oats, oatmeal or rolled oats. 

Corn, corn grits, corn meal, hominy, corn flour, starch 

from corn, corn oil, corn syrup or glucose. 
Rice, rice flour. 
Dried beans, , 

Pea seed or dried peas. 
Cottonseed, cottonseed oil, cottonseed cake or cottonseed 

meal. 
Peanut oil or peanut meal. 

Soya bean oil, soya bean meal, palm oil or copra oil, 
Oleomargarine, lard, lard substitutes, oleo oil or cooking 

fats, 
Milk, butter or cheese, 
Condensed, evaporated or powdered milk, 
Fresh, canned or cured beef, pork or mutton, 
Poultry or eggs. 
Fresh or frozen fish. 
Fresh fruits or vegetables. 
Canned: Peas, dried beans, tomatoes, corn, salmon or 

sardines, 
Dried : Prunes, apples, peaches or raisins, 
Sugar, syrups or molasses. 

Among those exempt from the operation of the ruling were : 
retailers whose gross sales of food commodities did not exceed 
$100,000 per annum; common carriers; farmers, gardeners, 
cooperative associations of farmers or gardeners and fisher- 



214 PRICES AND PRICE CONTROL DURING THE WAR 

men.^ The announced object of this licensing system was 
(i) to limit the prices charged by every licensee to a reasonable 
amount over expenses, and to forbid the acquisition of specu- 
lative profits from a rising market; (2) to keep all food com- 
modities moving in as direct line and with as little delay as 
practicable to the consumer; and (3) to limit, as far as prac- 
ticable, contracts for future delivery and dealings in future 
contracts.^ No licensee could "import, manufacture, store, 
distribute, sell or otherwise handle any food commodities on 
an unjust, exorbitant, unreasonable, discriminatory or unfair 
commission, profit or storage charge." 

With respect to enumerated commodities, the regulations 
required that profits should be no greater than a reasonable 
advance over the actual purchase price of the particular goods 
sold, without regard to the market or replacement value. 
In determining the amount of such advance, the Food 
Administration announced that the licensee could average the 
cost of goods of each class. For example, the cost of all canned 
corn on hand was to be averaged and a reasonable advance 
over such average was to be deemed a fair sale price for canned 
corn; but the licensee was not permitted to average the cost 
of all licensed commodities on hand and add an advance over 
such average. 

"Purchase price" was not meant to be used in the literal 
sense of the net invoice price of the goods, but included freight 
to the public railway terminal in the dealer's town. In a 
subsequent definition of the "purchase price" in connection 
with cold storage butter, eggs and poultry, the purchase price 
was stated to include original buying price, transportation, 
storage and insurance charges, interest on the money in- 
vested at the current rates during the period of storage and 
actual cost of printing when butter is put in print form from 
tubs or cubes. ^ 

1 For a detailed list of exemptions, see U. S. Food Administration, Proclama- 
tion and Executive Orders by the President, p. 8. 

2 Monthly Review of the U. S. Bureau of Labor Statistics, December, 191 7, p. 
1 167; also U. S. Food Administration, Policies and Plan of Operation, p. 97. 

3 Special Rules and Regulations Governing Dealers in Cold Storage Eggs and 
Frozen Poultry, effective March 2, 1918; Special Regulations Governing Manu- 
facturers, Dealers, Brokers and Commission Merchants in Butter, July 19, 1918. 



THE UNITED STATES 215 

When no specific margin has been laid down by the Food 
Administration, the standard of reasonableness was the 
profit which the "dealer customarily enjoyed on the same 
commodity in the prewar period on an even market under 
freely competitive conditions." Even when maximum mar- 
gins were specified, it was expressly stated that they were 
to be regarded as "guides only" and were in no way to limit 
the general principle that the advance was to be reasonable 
in relation to the customary prewar profit of the individual;^ 
as in the very next sentence it was asserted that "high mar- 
gins, even if customary during prewar period, are not justifi- 
able now," it was evidently possible to consider as a reason- 
able margin the customary prewar margin only in the case 
when the latter was reasonable in the prewar period. ^ An 
attempt was made to meet the difficulty by asserting that the 
reasonable margin for any particular dealer depended upon 
his "cost of operation," the cost of operation referring to the 
costs assignable to the particular class of commodity. 

Resales within the trade without reasonable justification, 
especially those tending to result in higher market prices, 
were declared unfair practices. 

Special rules prescribed that foods which have been held in 
cold storage for more than 30 days were to be marked ' ' cold 
storage goods" when offered for sale; other rules prohibited 
speculation in futures on canned goods; forbade the ship- 
ment of potatoes which had been seriously damaged ; protected 
the producer who shipped his products to markets on con- 
signment against unfair charges by commission men, brokers 
and auctioneers, and covered many other points. 

Although the small retailers of food were exempt from the 
licensing provisions of the Food Control Act, they were for- 
bidden under the terms of that act to hoard, monopolize, 
waste or destroy food, or to conspire with any one to restrict 
production, distribution or supply, or to exact excessive prices 

1 Maximum Margins on Sales by Wholesalers to (i) Retailers, (2) Importers 
of Beans and Peas, (3) Merchandise Brokers, April 6, 1918. 

2 L. C. Gray: "Price Fixing Policies of the Food Administration," American 
Economic Review Supplement, March, 1919, p. 257. 



2l6 PRICES AND PRICE CONTROL DURING THE WAR 

on any commodity. The act forbade manufacturers or whole- 
salers to sell to any retailers who were guilty of the above 
mentioned unfair practices. Retailers doing more than 
$100,000 business annually were required to secure licenses. 
The penalty for those who failed to obtain a license was five 
thousand dollars fine or two years' imprisonment. The 
penalty for the violation of the rules and regulations was the 
revocation of the license and criminal prosecution. 

In order to check hoarding, no licensee was permitted to 
keep on hand or under control food supplies for more than 
sixty days ahead. Certain exceptions were made to this 
ruling. 

The Food Administration attempted to keep track of the 
operations of all licensees by means of regular reports which 
the licensees were requested to submit once a month. It 
found itself swamped with such reports, which it was unable 
to examine carefully. After May i, 1918, the policy of re- 
quiring detailed monthly reports was abandoned. 

While the Food Administration had no authority to fix 
prices, it inaugurated in November, 1917, the policy of 
establishing "price interpreting boards" in the principal 
centers of population and of publishing, from day to day, 
fair retail prices at which foodstuffs were to be sold. 

A couple of weeks after the inauguration of the licensing 
system, Mr. Hoover prohibited combination sales on all 
groceries.' The order forbade "the sale of one or more food 
commodities upon condition that the purchaser shall buy one 
or more other food commodities from the seller." The single 
exception to the ruling was the permission to sell sugar in 
combination with corn meal at the rate of one pound of sugar 
with two pounds of corn meal; the exception was made as a 
wheat conservation measure. The reason given for the issue 
of the order was that "combination sales frequently result in 
the sale of more foodstuffs than the particular purchaser would 
ordinarily buy and are therefore determined to be a wasteful 

^Interstate Grocer, November 24, 1917, p. i. 



THE UNITED STATES 21/ 

practice within the meaning of section 4 of the Food Control 
Act of August 10, 1917." 

On December 10, 191 7, the control by means of licenses was 
extended to include all those engaged in the manufacture for 
sale of bread, cake, crackers, biscuits, pastry and other bak- 
ery products. This was followed by the licensing in February, 
1 91 8, of the importation, manufacture, storage and distribu- 
tion of feeds, copra, palm kernels, palm kernel oil, peanuts 
and green coffee, also the malting of barley or other grains. 

In May, 1918, the President extended the licensing power 
of the Food Administration to tuna fish, near beer, cottonseed 
and a number of other commodities.' 

One of the net results of the licensing system as applied to 
food dealers was that the Food Administration, by limiting 
traders' margins and regulating their methods, has relieved 
them of the responsibility with which they were formerly 
charged, by both producers and consumers, for the high cost 
of living. 2 

Other classes of business gradually brought under license 
were the arsenic industry (since November 20, 191 7), the 
ammonia industry (since January 21, 1918), the fertilizer in- 
dustry (since March 20, 1918) and the stockyards (since July 
25, 1918). The carrying into effect of the provisions of the 
various acts which extended licensing to the above industries 
was entrusted to the Secretary of Agriculture.^ 

At the beginning of July, 1918, the Food Administration 
recommended that the publication of "fair prices," heretofore 
confined to large cities, should be extended to every county 
in the country.^ Only a limited number of staple products, 
such as rye, flour, corn meal, sugar, lard, canned corn, canned 
tomatoes, dried fruits, eggs, butter, potatoes, cheese, ham and 
lard, was to be included in the list. It was suggested that 
price interpreting boards be instituted, consisting of representa- 

1 Commercial and Financial Chronicle, May 25, 1918, p. 2715. 

^ F. I. Nourse: "Price-Fixing. Discussion." American Economic Review Sup- 
plement, March, 1919, p. 273. 

^ U. S. Food Administration, Proclamation and Executive Orders by the President, 
pp.9, 21, 23, 24. 

* Official Statement of the U. S. Food Administration, July 6, 1918, p. 4. 



2l8 PRICES AND PRICE CONTROL DURING THE WAR 

tives of wholesale grocers, retailers and consumers. The board 
was to meet at least once a week, secure from the wholesale 
representatives the prices charged by them to the retailer and 
add thereto the proper margin of profit for the latter. 

The cooperation of newspapers was secured for a regular 
publication of "fair prices," and a checking system was in- 
stituted which enabled the county administrators to know 
whether the dealers were not charging prices in excess of 
those published; for this purpose the aid of the retail price 
reporters located in each county was invoked. A price re- 
porting scheme was also established in order to keep the Food 
Administration in Washington informed of the prices charged' 
for the staple commodities in the various parts of the country. 



CHAPTER IV 
Wheat, Flour and Bread 

Wheat 

The production of wheat in the United States fell from its 
high level of 891,017,000 bushels in 1914 and 1,025,801,000 
bushels in 1915 to 639,886,000 bushels in 1916; but, because of 
a large surplus from the preceding year, the wheat situation 
in 1916 was not grave. In addition to the crop, 178,- 
203,000 bushels carried over from the previous harvest ^ pro- 
vided a sufHcient supply for both domestic consumption and 
for export trade; the latter equaled 203,707,598 bushels, as 
compared with 122,998,754 bushels, our three year prewar 
average. For the crop of 191 7, the farmers had increased the 
total area under cultivation, but the winter killing had re- 
sulted in much abandonment and a low average yield, so that 
the total production in 191 7 was not far in excess of that of 
1916, i.e., 650,828,000 bushels. The carry over from the pre- 
ceding year was only 51,078,000 bushels, the lowest in many 
years. 

Obviously, the amount of wheat was insufficient to meet 
all demands, particularly because of the fact that ruthless 
German submarine campaign so reduced world tonnage as to 
make unavailable the wheat from Argentina, India and other 
distant markets. Upon the United States and Canada fell 
the burden of supplying the bread needs of the Allied and 
neutral countries of Europe. 

What were the Allied needs for 191 7 wheat may be seen 

from the following table : ^ 

Bushels Bushels 

Three year average prewar imports 380,804,000 

Three year average prewar production 590,675,000 

Estimated production, 19 17 350,000,000 

Deficiency 240,675,000 

Total requirements to maintain normal consumption. 621,479,000 

^ U. S. Food Administration, Policies and Plan of Operation {Wheat, Flour and 
Bread), p. 7. 
^ Ibid., p. II. 

219 



220 PRICES AND PRICE CONTROL DURING THE WAR 

The average price of No. i northern spring wheat in Minne- 
apoHs, July i, 1913, to June 30, 1914, was 89 cents a bushel. 
The price rose immediately upon the declaration of war and 
for the second half of 1914 wheat was selling at $1.09 a bushel.^ 
It continued to advance steadily through the winter and spring 
months of 1915, rising to $1.58 cents in May, a level it did not 
reach again until September, 191 6, when wheat was quoted in 
Minneapolis at $1.61 cents. Due to an exceptional harvest, 
prices were comparatively low during the latter part of 1915 
and the first half of 191 6; they fluctuated between 98 cents a 
bushel in September, 1915, and $1.29 cents in January, 1916. 
The advance which commenced in July, 1916, carried the 
price to $2.98 cents a bushel in May, 191 7, the highest price 
it ever reached in the Minneapolis market. 

The ascent of prices in Chicago during the period from 
July, 1916, to July, 1917, for cash No. 2 hard winter wheat 
was: - 



July, 1916 $1 

August, 1916 I 

September, 1916 i 

October, 1916 i 

November, 1916 i 

December, 1916 i 



159 January, 191 7 $i.79l 

457 February, 19 1 7 1.696 

570 March, 1917 i . 880 

739 April, 1917 . 2.377 

885 May, 1917 3.013 

735 June, 1917 2.675 



The highest price for wheat in the history of the Chicago 
Board of Trade was reached at the beginning of May, when 
cash wheat was selling at $3.25. There was very little benefit 
from these high prices for the farmer, who, according to the 
reports of the Department of Agriculture, received for the 
191 7 wheat an average of $1.44 per bushel, the bulk of the 
crop having been marketed by the producers during the earl}^ 
part of the harvest year. Manufacturers and distributors 
were accused by many of having forced the prices up by 
means of manipulating the market. While some of them may 
have made large profits from rising prices, it is hardly fair to 
put upon them or upon the speculators on the exchanges the 
blame for the excessive rise. The facts are that American 

^ War Industries Board, Bulletin of Monthly Prices during the War, November, 
1918, p. 62. 
^ U. S. Food Administration, Policies and Plan of Operation, p. 7. 



THE UNITED STATES 221 

business interests on the whole had been endeavoring to 
restrict the upward trend of wheat prices, and, as far as specu- 
lative interests were concerned, many of them have sold short 
in an anticipation that the price will go down. The short 
sellers overlooked the fact that the situation on the other side 
of the Atlantic was abnormal. The Wheat Export Company, 
representing the Allies, was feverishly buying all the wheat in 
sight, buying not only in the cash market, but also for future 
delivery, and the same was true of the firms representing 
neutral governments. To this uncontrolled buying from 
Europe, buying that was absorbing all the wheat thrown on 
the market, irrespective of the price it commanded, was 
added an unusual demand. for flour by many panic stricken 
private consumers in this country. In order to be provided 
against any contingencies they were laying in vast supplies. 
The blame for the latter situation was placed by some writers 
upon the United States Government which was sending out 
alarming crop reports and whose officials were continuously 
warning the public that unless it curtailed consumption a 
famine would be the result.^ 

The wheat market became so "oversold" and the situation 
so alarming that on May 12, 191 7, the Chicago Board of 
Trade suspended all tradings in May wheat. It appointed 
at the same time a price fixing committee; the latter held a 
series of conferences in Chicago, in which the United States 
District Attorney and representatives of the British Govern- 
ment took part. The committee prescribed the settlement 
of all May contracts at $3.18 a bushel. Subsequently, specu- 
lative trading in July and September futures was also pro- 
hibited. The settling price for July and September futures 
was fixed at $2.75 and $2.45 respectively. The action of the 
Chicago Board of Trade suspending speculation was followed 
by similar actions at St. Louis, Duluth, Kansas City, Minne- 
apolis and Toledo.^ 

The Food Control Act guaranteed a minimum price of $2.00 

1 W. C. Edgar: "Bureaucracy and Food Control," American Review of Reviews, 
1917, p. 626. 

2 Commercial and Financial Chronicle, March 30, 1918, p. 1281. 



222 PRICES AND PRICE CONTROL DURING THE WAR 

a bushel for the wheat crop of 191 7-1 8. This was the only 
price fixed by legislation and the only guaranteed minimum 
price which was in existence in this country during the war. 
The minimum was later raised under the discretionary powers 
of the President to $2.20, and the same price was extended to 
the crop of 191 8-1 9. 

The figure of $2.20 was reached by no careful cost inquiries 
or statistical computations but in consequence of a desire to 
increase the production of wheat and also to placate the 
farmers.^ 

Opinions as to the "fairness" of this minimum price varied. 
Prof. G. E. Call of the Kansas State College of Agriculture 
estimated that it meant an average net profit for the farmer 
of $1.41 per bushel. He based this estimate on an average 
value of $48 per acre for the wheat land of the country, an 
average crop of fourteen bushels to the acre, and an average 
cost of 78.7 cents per bushel to the farmer. On the other 
hand, at the meeting of the National Non-Partizan League 
held at St. Paul in the latter part of September, 191 7, Mr. 
I. M. Hagan, North Dakota's Commissioner of Agriculture, 
presented figures to prove that it cost a North Dakota farmer 
over $2 1 an acre to raise wheat. As the average for the State 
was only seven bushels an acre, the cost for raising one bushel 
of wheat was, according to him, $3.00.^ A calculation made 
by a Missouri farmer placed the average cost for raising a 
bushel of wheat in 1917, with a yield of 19^ bushels per acre, 
at $1.8152.3 No item of expense seems to have been too small 
or too remote not to have been included in this calculation of 
costs. 

The correctness of the judgment of those who fixed the 
price at $2.20 per bushel was demonstrated by an increased 
acreage under winter wheat; it rose to 42,000,000 acres, an 
advance of about 2,000,000 acres over any acreage before 
known in American history, and an increase of 7,000,000 acres 

1 F. W. Taussig, "Price Fixing as Seen by a Price Fixer," Quarterly Journal of 
Economics, February, 1919, p. 207. 

2 The Literary Digest, Sept. 29, 1917, p. 10. 

2 Food Administration, Doubling the Wheat Dollar, p. 6. 



THE UNITED STATES 223 

over prewar average.^ The price of $2.20 was a compromise 
between $1.84 demanded by labor representatives and $2.50 
advocated by the representatives of the farmers. 

As the minimum price estabhshed by the Food Control Act 
did not apply to the 191 7 harvest, the President appointed a 
committee, selected from the various producing sections and 
consuming interests of the country, to determine the price at 
which grain was to be purchased by the government before 
the coming on the market of the 1918 wheat crop. This com- 
mittee was appointed on August 15; among its members were 
four farmers, one capitalist, three college professors, one 
banker, one professor of economics and two representatives 
of labor. 2 Mr. H. A. Garfield was made the chairman of the 
committee. 

In a report presented on August 30, 191 7, the committee 
recommended that the price of No. i northern spring wheat, 
or its equivalent, should be $2.20 per bushel at Chicago.^ It 
based its conclusions upon the "cost estimates for the crop of 
1 91 7 furnished by the United States Department of Agricul- 
ture, checked by the results of independent investigations and 
the evidence submitted to the committee by producers and 
their representatives." The time which intervened between 
the appointment of the committee and the presentation of the 
report was so short that a painstaking investigation by the 
committee of the cost of wheat production was obviously out 
of the question. 

Acting upon the committee's recommendation, the Presi- 
dent issued an order establishing the price for 191 7 wheat. 
According to this order, taking $2.20 as the basic price, the 
prices of other grades in Chicago ranged from $2.10 for No. i 
humpback to $2.24 for No. i dark hard winter. No. i dark 
northern spring and No. i amber durum. Equivalent to No. 
I northern spring, or basic, were No. i hard winter. No. i 
red winter, No. i durum and No. i hard white. 

1 Commercial and Financial Chronicle, March 2, 1918, p. 876. 

2 Monthly Review of the U. S. Bureau of Labor 5to^wiic5, September, 1917, p. 70. 

3 U. S. Food Administration, Policies and Plan of Operation, pp. 24-25. 



224 PRICES AND PRICE CONTROL DURING THE WAR 

Differentials between the different primary markets of the 
United States were estabHshed as follows: 

Kansas City and Omaha, 5 cents less than basic; Duluth 
and Minneapolis, 3 cents less; St. Louis, 2 cents less; New 
Orleans and Galveston, basic; Buffalo, 5 cents more; Balti- 
more and Philadelphia, 9 cents more; and New York, 10 cents 
more than the basic- The prices for Nos. 2, 3 and 4 of each 
grade were recommended to be, respectively, 3, 6 and 10 cents 
less than basic. 

Many unsuccessful attempts were made to increase the 
minimum price for the 191 8 crop to $2.50 (Senator Gore's bill) 
and even to $2.75 (Senator McCumber's bill). On February 
20, 1918, the Food Administration announced that it would 
use all its influence to prevent the enactment of any price 
increasing bill because the passage of such a bill would upset 
its entire wheat and bread program. ^ 

In an effort to force an increase, an amendment raising the 
price of wheat to $2.40 was included in the annual agricultural 
appropriation bill for the fiscal year 191 8-1 9. President Wil- 
son vetoed this bill. Those who opposed the higher minimum, 
argued^ that any such change would disorganize the plans 
made by the administration, would be unjust to those farmers, 
millers, etc., who had made contracts on the established basis, 
and would raise unduly the price of flour to the consumers 
(from $10.50 to $12.50 a barrel). It was also pointed out 
that the Allies were buying Argentinian wheat at $1.40 a 
bushel. 

The Food Administration's measures affecting the wheat 
trade were very largely the result of recommendations by a 
Committee of Grain Exchanges in Aid and National Defense. 
This committee was organized in April, 1917, after consulta- 
tions between the Council of Grain Exchanges and the Secre- 
tary of Agriculture. The committee at the request of Mr. 
Hoover, submitted a plan of action which in its opinion would 
be acceptable both to the government and to the trade. 

1 Monthly Review of the U. S. Bureau of Labor Statistics, November, 191 7, p. 80. 
^ 2 Commercial and Financial Chronicle, February 23, 1918, p. 771. 
^ The New York Evening Post, December 31, 19 18. 



THE UNITED STATES 225 

The committee expressed itself in favor of fixing a wheat price 
and of maintaining it for the entire crop year without change; 
it also went on record as desirous of governmental control of 
the distribution of the available wheat supply; the discontinu- 
ance of trading in futures in wheat on the grain exchanges; 
and the limitation of the practice of buying flour far in advance 
of actual needs. ^ 

The other body which helped to shape the control of wheat 
trade was the United States Millers' Committee appointed by 
Mr. Hoover on June 22. It consisted of nine leading mem- 
bers of the flour milling industry, representing the several sec- 
tions of the country. The committee reported on June 28 a 
plan which proposed that each mill should be entitled to sell 
its products on a cost plus profit basis, provided the cost of 
manufacturing and marketing did not exceed seventy-five 
cents per barrel, while the amount of profit was to be limited 
to twenty-five cents per barrel. The mills agreed to abide by 
the government's allocation of business among them on the 
basis of their average output for the three preceding years. 
They also agreed that their sales of flour should be limited to 
a period of thirty days in advance. These proposals were 
ultimately adopted as the basis of milling regulations. - 

In order to eliminate speculation in wheat and flour, the 
Food Administration adopted the following measures: 

First. It limited the right to storage of wheat and flour 
without the approval of the Food Administration to thirty 
days. 

Second. The flour mills of the country were prohibited 
from contracting for sale of flour more than thirty days in 
advance. 

Third. All the grain exchanges of the country were re- 
quested to suspend during the period of war all trade in futures 
of every kind.^ 

One of the effects of the Food Administration's rulings was 

1 W. Eldred: "Wheat and Flour Trade," Quarterly Journal of Economics, No- 
vember, 1918, p. 6. 

^ Ihid., p. 9. 

2 U. S. Food Administration, Policies and Plan of Operation, p. i6. 



226 PRICES AND PRICE CONTROL DURING THE WAR 

the elimination of the ordinary means by which the greater 
part of the country's grain trade is financed, i.e., through the 
purchase and sale of futures. It became necessary to use 
government funds for the purpose of carrying the movement 
of wheat and to provide some machinery which would assume 
the functions of the normal agencies of distribution. The 
problem was solved by the establishment of the United States 
Food Administration Grain Corporation, 

There were precedents in the government doing business 
through business corporations; such were for instance the 
Emergency Fleet Corporation and the Panama Railways. 
Mr. Hoover saw the advantages of economy, flexibility and 
expedition which lie in such a system as compared with rely- 
ing upon the ordinary machinery of the Treasury, so ill 
adapted to trading operations. Like all the other organiza- 
tions created by Mr. Hoover, the Grain Corporation was not 
bureaucratic either in its personnel or in its character. 

Some of the country's best experts in the wheat trade were 
made responsible heads of the corporation. It opened its 
offices on September 4, 191 7, and immediately proceeded to 
regulate the conditions in the wheat markets. Provided with 
$50,000,000 of the government funds, it became the dominant 
purchasing factor all over the United States. The country 
was divided into fourteen zones, each containing an important 
terminal market. Government representatives who were large 
scale dealers themselves before the war were appointed as 
buyers. Grain corporation agents at various milling centers 
acted as distributors of wheat ; they apportioned the wheat as 
it arrived at each center among the various mills of the place 
in accordance to the needs of each mill. 

The agreement between the Grain Corporation and the 
flour millers provided that the latter should in purchasing 
wheat observe and be governed by all rules and regulations 
enacted by the corporation. The Grain Corporation guaran- 
teed millers against losses by a decline in value on all accumu- 
lated surplus of unsold wheat bought in accordance with the 
Grain Corporation's regulations; it further agreed to endeavor 



THE UNITED STATES 227 

to maintain in available positions, an adequate supply of suit- 
able wheat to meet the milling demands of the miller at the 
general price level of wheat. 

On June 21, 1918, the capital stock of the Food Administra- 
tion Grain Corporation was increased to $150,000,000. The 
purpose of the executive order which authorized this increase 
was twofold: first, to enable the Food Administration to make 
the necessary readjustments in wheat prices at guaranty ter- 
minals to cover the increase in railway rates; and second, in 
view of the large harvest, to provide the Grain Corporation 
with the increased capital necessary to carry out the guaranty 
to the producer. The intention was to readjust prices at 
primary markets in such a way as to place the farmer in as 
nearly as possible the same position as the one which he 
enjoyed prior to the increase in freight rates. ^ 

The "fair price" for "basic" wheats in Chicago was fixed 
at $2.26; prices in the other markets ranged from $2.18 in 
Kansas City and Omaha to $2.39^ in New York. As in the 
previous regulations, certain classes and varieties of wheat 
were dealt in either at premiums over or at discounts under 
the prices for "basic" wheats. The "premium" was 2 cents 
for No. I dark hard winter. No. i dark northern spring and 
No. I amber durum; the "discounts" varied from 2 cents for 
No. I yellow hard winter and No. i soft white to 7 cents for 
No. I red durum and No. i red walla. Discounts for grades 
other than No. i were fixed at 3 cents under No. i for No. 2 
wheat and 7 cents under No. i for No. 3 wheat. Grades 
below No. 3 were to be dealt in on sample on merit. - 

Two courses were open to the farmers : either to ship direct 
to the Grain Corporation at any of the principal primary 
markets, or to ship to a commission merchant and through 
him offer the wheat for sale in the open market, thus securing 
the benefit of competitive buying. The competitive market 
was held in check as the millers agreed not to pay for the wheat 
a price in excess of that adopted by the Food Administration 

1 Official Statement of the U. S. Food Administration, July 6, 1918, p. I. 

2 U. S. Dept. of Labor Monthly Labor Review, August, 1918, p. 358. 



228 PRICES AND PRICE CONTROL DURING THE WAR 

for government purchases. This fixed the maximum price 
offered by domestic purchasers. Export buying for the 
AUies was concentrated in the hands of the Wheat Export 
Company, which, as well as the buyers representing neutral 
nations, acted in concert with the Grain Corporation. Com- 
petition among foreign buyers was in this way also eliminated 
and a stabilized price for foreign purchases assured. 

Because the price of wheat was reduced below what it would 
have been under competitive conditions, it became relatively 
lower than the price of other foods, with the result that al- 
though a portion of the population refrained from eating 
wheat in response to the Food Administration's appeals, the 
total consumption in the first part of 191 7-1 8 was somewhat 
larger than in 1916-17. An unduly large proportion of the 
year's crop was consumed by February, 191 8. The year's 
exports were much lower than in the previous year. It be- 
came necessary to resort to the use of wheat substitutes.^ 

The Food Administration first compelled the purchase of 
other cereals with wheat flour on January 28, 1918, when the 
"50-50" rule went into effect. On February 3, the first 
compulsory baking regulations were imposed upon the trade. 
On that date bakers were required to mix 5 per cent of other 
cereals with their wheat flour; by February 24, the proportion 
of substitutes was increased to 20 per cent. In April the 
wheat shortage had become so acute that the bakers were 
compelled to increase the use of substitutes to 25 per cent. 
These baking regulations, as well as the 50-50 rule, remained 
in force until August 28, when the bakers were once more 
allowed to make a bread containing only 20 per cent of wheat 
substitutes and the 50-50 rule was changed to 80-20. On 
November 14 the Food Administration suspended all regula- 
tions requiring the use of wheat substitutes. ^ 

The guaranteed price of wheat for, the 1919 crop has not 
been affected by the end of the war. This guarantee expires 
June I, 1920. 

' G. F. Warren: "Some Purposes and Results of Price Fixing," American Eco- 
nomic Review Supplement, March, 1919, p. 240. 

^ Official Statement of the U. S. Food Administration, December i, 1918, p. 7. 



THE UNITED STATES 229 

Flour 
Control of the Mills 
Flour rose in price upon the declaration of the war in Europe 
from $4.49 a barrel in Minneapolis, in June, 1914, to $5.51 
in August of the same year;' the average prices of flour for 
1914, 1915 and 1916 respectively were $5.09, $6.66 and $7.26 
as compared with $4.58 for 1913. The pronounced advance 
did not begin until July, 1916; the quotation rose from |6.io 
during that month to $9.82 in November, 1917; a slight de- 
cline occurred in December when the price dropped to $8.68. 
The average for the first quarter of 1917 was $9.30. Upon 
the declaration of the war by the United States, flour went 
up to $11.62 in April and to $14.88 in May, 1917, the highest 
point it ever reached. When the government began its price 
regulating activity in August, 191 7, flour was selling for 
$13.07 a barrel. According to the findings of the Federal 
Trade Commission, the net profits made by millers increased 
from II cents per barrel in the crop year, 1912-13, to 52 cents 
per barrel in the crop year, 1916-17.^ The price of flour went 
down to $11.26 in September, and to $10.13 in December, 

191 7, around which figure flour was selling during the first 
half of 1918, the price fluctuating between $9.52 in May and 
$10.30 in February. 

In order to carry out the provisions of the Food Adminis- 
tration's regulations dealing with flour mills the country was 
divided into nine milling divisions, and a committee of repre- 
sentative millers was appointed by the Food Administration 
in each division.^ The chairmen of the different divisions 
constituted a central committee, whose headquarters were in 
New York. The entire structure was known as the United 
States Food Administration Milling Division. 

The millers undertook to regulate their trade by voluntary 
agreement, which became effective on September 10, 1917. 

1 War Industries Board, Bulletin of Monthly Prices during the War, November, 

1918, p. 44. 

2 Report of the Federal Trade Commission on Flour Milling and Jobbing, April 
4, 1918, p. 7. .^ . 

^ U. S. Food Administration, Policies and Plan of Operation, p. 37. 



230 PRICES AND PRICE CONTROL DURING THE WAR 

The principal points of the agreement were: (i) they could 
not purchase wheat at a higher price than the fair price; 
(2) the Grain Corporation was to endeavor to supply the mill- 
ers with wheat on the basis of an average of their assessed 
capacity; (3) the millers were to operate their mills at a net 
profit not exceeding 25 cents a barrel on flour and 50 cents a 
ton on feed (the latter was equivalent to about 1.7 cents per 
barrel of flour additional) ; this maximum profit was based 
upon the needs of the small mills. ^ The Federal Trade Com- 
mission objected to the regulation of flour millers' profits at a 
fixed margin above cost of production, because such a method 
of remuneration possesses an Inherent weakness of not encour- 
aging production and of affording to those unpatriotically 
inclined a temptation to dishonesty in cost accounting.'^ Not 
a few millers took advantage of the situation and loaded their 
cost reports with such items as new construction and equip- 
ment, bad debts of ancient standing, excessive depreciation 
charges, losses on miscellaneous outside investments, etc. ; 
all these were added to current costs of production and so 
charged to the consumer;^ (4) the millers could not contract 
for flour more than 30 days in advance; (5) they could not 
store wheat without permission of the Food Administration 
for more than 30 days' supply; (6) they were to apportion 
over the entire milling trade the export purchases of flour.* 

Inasmuch as a minority of millers failed to enter this agree- 
ment it became necessary, both in protection to the voluntary 
adherents, to the administration and to the public, to legally 
license the entire trade of a capacity in excess of 75 barrels 
per day. On November 27, 191 7, agreements received 
showed that the past three year average production of mills 
operating under voluntary regulations was 101,131,481 bar- 
rels out of a comparative production of all mills in the United 
States of 118,000,000 barrels. Some of the results accom- 

1 Report of the Federal Trade Commission on Flour Milling and Jobbing, April 
4, 1918, p. 19. 

2 Ibid., p. ID. 

3 W. Eldred: "The Wheat and Flour Trade under Food Administration Con- 
trol," Quarterly Journal of Economics, November, 1918, p. 47. 

* U. S. Food Administration, Policies and Plan of Operation, p. 39. 



THE UNITED STATES 23 1 

plished through the cooperation and regulation of these mills 
were according to the Food Administration : 

Basic wheat prices had been maintained and observed 
throughout the industry, and, in conjunction with the Grain 
Corporation, the Milling Division effected an equitable dis- 
tribution to mills of all available wheat supplies. 

A price reduction in the mill sale of flour took place which 
reflected the proper relation between the cost of raw material 
and the finished product. It takes approximately 4I bushels 
of wheat to make a barrel of flour. In reviewing the course 
of prices of wheat and flour on this basis, Mr. Hoover formu- 
lated the following table :^ 

nS '° oi • e id's d"« 

— S "m ojsC S^'t3 'r'1'5 uiiS 

Harvest Year f^(^| ^t <=^Z^ ' Q « co QtJ^ at>M 



Sc^ t^S 23S= S.SE^ .S^^S S3^^ 
^|S |«-^ ^j2o| ^^|o -gwac |^a« 

1915-6 $0.98 $4.41 $6.09 $1.68 $2.71 $0.81 

1916-7 1.44 6.48 9.88 3.40 9.26 .50 

1917-8'' 2.01 9.05 10.15 I 10 1.60 .90 

* Department of Agriculture figures. 
^ Since control mid-September. 

The Food Administration also prepared a chart (page 232) , 
showing graphically the results of the activities of the Milling 
Division from its establishment to November 4, 191 7. 

Reduction of cost to the consumer was secured by the 
standardization of flour packages and the elimination of 
wasteful and costly containers. 

The Milling Division had furnished the material and the 
machinery for the purchase of all of the flour requirements of 
the European Allies, with the least disturbance of domestic 
conditions and at a price in accordance with a minimum 
of expense; it also materially assisted the army and navy 
in securing and distributing adequate supplies of flour, 
promptly and advantageously. 

A new policy regarding the milling industry was inaugurated 

^ "America's Grain Trade," Herbert Hoover's Address at the Conference of the 
Grain Trade of the United States, April 30-May I, 1918, p. 5. 

16 



232 



PRICES AND PRICE CONTROL DURING THE WAR 



PRICE OF WHEAT AND BULK FLOUR AT 
MINNEAPOLIS 



$15.00 



1400 



13.00 



12.00 



11.00 



10.00 



900 



8.0O 



7.00 



&.00 





\ 






























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/ 




qovtRNt 


■lewT 


PRIC 


ETO FAR ME 


^3 ro 


R 4 V BUSHELS OF WHEAT 


'1917' 










(' 


■REIQ 


HT INCLUD 


ED T 


Ml 


NNEA 


POLli 


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e^t 


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wqE 


_PRIC 


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r ~ 1 


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Week 



12. 19 26 
Ay GUST 



(6 23 30 



14 21 2S 4 



SEPTEMBER 



OCTOBER 



NOV 



Approximately \\ Bushels of Wheat are Required for 
I Barrel of Flour 



on July I, 1918. Instead of a permissible profit of 25 cents a 
barrel, millers under the new arrangement were allowed to 
receive for the milling of the new harvest wheat $1.10 a bar- 
rel, out of which they were to pay all their expenses.^ This 
temporary arrangement was superseded a few weeks later by 
a plan of flour and feed price control which relieved the mills 
"of the trouble of calculating prices through the announce- 
ment of a fair price at every mill point in the United States. 2 

^ Commercial and Financial Chronicle, June 29, 1918, p. 2705. 
^ Ofificial Statement of the U. S. Food Administration, September 12, 1918, pp. 
lO-II. 



THE UNITED STATES 



233 



Prices at typical points for carload lots, in bulk, at the mill, 
were established as follows: 



Milling Points 



Flour 



Boston $10 .65 

New York 10.61 

Philadelphia 10.57 

Baltimore 10 . 55 

Nashville, Tenn 10 .38 

Atlanta, Ga 10 • 73 

Louisville, Ky 10.30 

New Orleans, La 10.16 

Galveston, Tex 10 .23 

Buffalo, N. Y. 10 .33 

Cleveland, Ohio 10.33 

Chicago, 111 10.14 

Minneapolis, Minn 10.01 

Aberdeen, S. Dak 9-65 

Wichita, Kans 9 . 58 

Fort Worth, Tex 10.12 

Omaha, Nebr 9 .89 

Kansas City, Mo 9 89 

St. Louis, Mo 10 .09 

Indianapolis, Ind 10 .27 

Denver, Colo 9 29 

Little Rock, Ark 9 . 86 

Detroit, Mich 10 .31 

Sioux City, Iowa 9-78 

Oklahoma City, Okla 9 .63 

Minot, N. Dak 9.65 

Kalispell, Mont 9 .33 

Memphis, Tenn 10.28 

Spartanburg, S. C 10 .85 

Charleston, W. Va 10 .43 

Albuquerque, N. Mex 10 .56 

Salem, Ore 9-75 



Bran 



$30.66 
30.26 
29.86 
29.66 
27.46 
31.06 
26.86 
27.26 
29.66 
28.16 
27.76 
25.26 
23-36 
19-95 
19.41 
28.66 
22 .26 
22 .26 
24.46 
26.86 
16.92 
26.76 
27.46 
21.56 
26.66 
19.69 
17.32 
26.46 
32.26 
28.36 

33-35 
21 .27 



Mixed 
Feed 

$31-91 
31-51 
31. II 
30.91 

28.71 

32.31 
28.11 
28.51 
30.91 
29.41 
29. ox 
26.51 
24.61 
21 .20 
20.66 
29.91 
23-51 
23-51 
25-71 
28.11 
18.17 
28.01 
28.71 
22.81 
27.91 
20.94 

18-57 
27.71 

33-51 
29.61 
34.60 
22.52 



Mid- 
dlings, 
Shorts, 
Red Dog 
$32.66 
32 .26 
31-86 
31.66 
29.46 
33-06 
28.86 
29.26 
31.66 
30.16 
29.76 
27.26 
2536 
21.95 
21 .41 
30.66 
24.26 
24.26 
26.46 
28.86 
18.92 
28.76 
29.46 
23-56 
28.66 
21 .69 
19.32 
28.46 
34.26 
30-36 
35-35 
23-57 



These prices were not fixed prices, but were figures named as 
maximums at which it was considered "fair" by the Food 
Administration that sales be made. It was expected that 
competition would result in many sales being made at under 
these figures. Margins over and above the carload cash or 
draft basis, were specified and limited; they averaged approxi- 
mately 55 cents where flour was packed in No. 98 or larger 
sacks ; the cost of small containers ran proportionately higher, 
going up as high as $2.40 per barrel over the bulk price where 
flour was shipped in No. 2 packages. 

In the early part of December the Food Administration 
announced the cancellation of all flour milling regulations, 



234 PRICES AND PRICE CONTROL DURING THE WAR 

including fair price schedules and price and quantity restric- 
tions on sale of wheat flour by millers. ^ 

Control of Wholesaling and Retailing 

The control of flour wholesalers and flour jobbers was 
covered by the Presidential Proclamation of October i , which 
placed the dealers in flour under license. Like the distribu- 
tors of other necessaries, they were limited in their charges 
to a price which would give them a reasonable margin over 
cost without regard to the market or replacement value of the 
commodity. This margin was not to be greater than that 
which they had normally enjoyed in the prewar period. ^ 
The Food Administration acknowledged that the departure 
from the market or replacement value was a radical one, but 
it deemed it necessary to resort to it because of shortage of 
supplies, the vast export demand and the constantly increas- 
ing home demand. 

The licensees were required to keep the flour moving to the 
consumer in as direct a line as possible and without unreason- 
able delay; this was done in order to prevent resales within 
the trade which tend to increase the price to the retailer or 
the consumer. 

In order to prevent speculation and hoarding, licensees 
were strictly limited to a 30 days' supply. Moreover, they 
were forbidden to sell to any person, licensed or unlicensed, if 
the sale was to give such person more than a thirty days' 
supply. 

According to the findings of the Federal Trade Commission, 
the gross profits of the car lot distributors increased from 22 
cents per barrel in the calendar year 19 14 to 54.4 cents per 
barrel in the first half of the calendar year 191 7. As the ex- 
penses, exclusive of salaries, advanced only from 10 cents to 
13.5 cents, the net profits per barrel rose from 18 cents to 41 
cents and the rate of profit on investment increased from 31.5 
per cent to 60.7 per cent.^ The gross profits of small lot 

1 Industrial News Survey, December 16-23, 1918, p. 7. 
^ U. S. Food Administration, Policies and Plan of Operation, p. 45. 
^ Report of the Federal Trade Commission on Flour Milling and Jobbing, pp. 
7,18. 



THE UNITED STATES 235 

jobbers increased during the same period from 52 cents per 
barrel to 86.3 cents per barrel, which represented an advance 
in the net profits from 21 cents to 47.5 cents and in the rate 
of profit on investment from 26.2 per cent to 51.9 per cent.^ 

Under the regulations the maximum gross profit of car lot 
jobbers had been fixed at 25 cents a barrel and of small lot 
jobbers at from 50 to 75 cents per barrel. These were gross 
profit margins, leaving the jobbers free to earn what they 
could by efficient operation. ^ 

Retailers were allowed margins of 80 cents to |i.20 cents 
per barrel over cost.^ 

New licensing regulations, which became effective Novem- 
ber 4, 1918, allowed maximum margins on sales by whole- 
salers to retailers equal to 60-90 cents per barrel. 

Upon the signing of the armistice the Food Administration 
announced that regulations restricting margins of profit on 
flour and mill feeds and regulations prohibiting profiteering, 
hoarding and unfair practices were to remain in effect until 
the signing of the treaty of peace.* 

Bread 

The average retail price of a pound loaf of bread rose from 
5 cents on July 15, 1914, to 6.4 cents on November 15, 1914; 
the subsequent advances brought the price of the pound loaf 
on November 15, of 1915, 1916, 1917 and 1918 to 7 cents, 8.4 
cents, 9.9 cents and 9.8 cents respectively.^ Thus at the time 
of the signing of the armistice the price of bread was about 
80 per cent higher than it had been just before the outbreak 
of war. The increase in the price in many localities was much 
greater than the general average indicates. 

When the Food Administration was organized it placed the 
control over the production and distribution of bread in the 
hands of a Baking Division. The latter took steps almost 
immediately to standardize baker's bread, both from the stand- 

1 Report of the Federal Trade Commission on Flour Milling and Jobbing p. 7. 

2 Ihid., p. 10. 

^ Commercial and Financial Chronicle, August 17, 1918, p. 651. 
^ Industrial News Survey, Vol. ii, No. 43, p. 7. 
^ Monthly Labor Review, January, 1919, p. 89. 



236 PRICES AND PRICE CONTROL DURING THE WAR 

point of weight and of the ingredients used In the baking. 
The object of standardization was to reduce the cost of pubHc 
baking and distribution, to reduce the waste of flour and to 
limit the use of sugar and lard in the preparation of bakery 
bread.- The minimum weight of a loaf was fixed atone 
pound; larger loaves could weigh i^, 2 and 4 pounds. Previ- 
ous to this ruling there were 38 different weights on the 
market. 

The most prevalent system of bread distribution in this 
country before the war was the sale of bread by the grocery- 
man, who delivered it and charged for it; the retailer himself 
obtained the bread from a wholesale bakery. Bread thus 
distributed had cost the consumer from nine to fifteen cents 
per pound. The other less expensive systems of distribution 
were the "cash and carry" stores and the small baker who 
delivered his own product directly to the consumer. It was 
anticipated by the Food Administration (an anticipation that 
did not materialize) that "cash and carry" grocery stores 
conducting their own bakeries would sell the one pound loaf 
for about 7 cents. 

In New York the Federal Food Board on March 20, 1918, 
after a series of conferences with representatives of the baking 
industries, authorized a price for the 16 ounce loaf, unwrapped, 
of 8 cents wholesale and 9 cents retail and wrapped, 8^ cents 
wholesale and 10 cents retail. On September 20, 1918, a 
notice was sent to all Federal Food Administrators, stating 
that an investigation by the Baking Division of manufactur- 
ing cost and wholesale and retail prices of bread warranted 
establishing a maximum retail price for a one pound loaf at 
10 cents and a one and half pound loaf at 15 cents. These 
were maximum prices to be enforced in each State and to 
apply to either cash and carry or credit and delivery sales. 
The investigation showed wholesale prices of 8 and 12 cents in 
many sections. These wholesale prices warranted a retail 
price of 9 cents for the pound loaf and 14 cents for the pound 
and a half loaf, cash and carry. ^ 

^ U. S. Food Administration, Policies and Plan of Operation, p. 49. 

2 U. S. Food Administration Official Statements, October i, 1918, p. 17. 



CHAPTER V 

Sugar 

The abnormal conditions in the American sugar industry 
which prevailed from the beginning of the great war were due 
largely to the destruction of many European beet fields and 
factories, the production in Europe having declined from 
8,179,013 tons in 1913-14, to 7,583,215 in 1914-15, 5,077, 760 
in 1915-16 and 4,555,407 in 1916-17.1 According to the 
statement of the Food Administration, sugar beet production 
has declined in all the European sugar producing countries 
as follows :- 

Country Equivalent in Short Tons 

1917-18 1916-17 1915-16 1914-15 

Germany 1,760,000 1,705,000 1,663,000 2,860,000 

Austria-Hungary 737,ooo 1,038,000 1,033,000 1,762,000 

France 248,000 228,000 166,000 370,000 

Russia, Ukraine, Poland, etc 880,000 1,458,000 1,838,000 2,176,000 

Belgium 140,000 149,000 124,000 224,000 

Holland 220,000 296,000 267,000 333,000 

Sweden 146,000 151,000 140,000 169,000 

Denmark 147,000 124,000 138,000 168,000 

Other Countries 220,000 275,000 330,000 404,000 

Totals 4,498,000 5,424,000 5,699,000 8,466,000 

The situation was aggravated by a gradual elimination of 
distant areas as sources of supply, the lack of transportation 
facilities making, for instance, the enormous tonnage of Javan 
sugar unavailable for European and American consumers. 

It should be noted in this connection that the largest im- 
porter of sugar, the United Kingdom, received before the war 
54.2 per cent of her sugar supply from Germany and Austria- 
Hungary^ and that France and Italy, which before the war 
obtained most of their sugar from their home production, 

1 Conditions in the Sugar Market, January-October, 1917, The American 
Sugar Refining Co., p. 8. 

2 Official Statement of the U. S. Food Administration, December i, 1918, p. 10. 
' Ibid., September 12, 1918, p. 8. 

237 



238 PRICES AND PRICE CONTROL DURING THE WAR 

were forced during the war period to rely upon importations 
in order to cover the major part of their needs. 

The Cuban market, which prior to the war had been almost 
the exclusive field of the United States refiners, became the 
center of a feverish purchasing activity on the part of the 
Allied governments and of neutrals. The quantity of sugar 
imported into the United Kingdom and the continent of 
Europe increased from 304,565 tons in 1913-14 to 730,993 
tons in 1915-16.^ To what extent the Allies depended through 
1 91 7 and 191 8 for their sugar upon Cuba and the United 
States may be seen from the following table -."^ 

Prewar An- 
nual Average 1917 ^^igiS 
(1909-13) 
Exports of unrefined sugar from: 

Cuba 143,824 956,765 1,200,000 

Hawaii .... .... 30,000 

Philippines .... 56,785 .... 

Exports of refined sugar from the 

United States 23,167 264,167 150,000 

* Estimated in September, 1918. 

Just before the outbreak of the great war sugar was selling 
in the United States at a lower figure than it had been for 
many years. Average yearly wholesale and retail prices for 
granulated sugar were : ^ 

Wholesale Prices Average Retail Price 

In 191 1 5,33 per pound 6. 10 per pound 

" 1912 5.05 " " 6.30 " 

" 1913 4-27 " " 550 " 

" 1914 4-71 " " 590 " 

Sugar was quoted only a little above $4.00 per 1 00 pounds in New 
York when the war broke out. Within a month it had risen 
to $7.10, from which height it soon temporarily fell; the aver- 
age wholesale price for 1915 was $5.56 and for 1916, $6.88. In 
April, 1917, the price was $8.14, as compared with $3.67 dur- 
ing the same month in 1914; in August, 1917, it went up to 
$9.75; the retail price at the same time reached in some places 
20 to 25 cents a pound. Mr. Hoover's efforts to control the 

1 Conditions in the Sugar Market, January-October, 1917, pp. 12-13. 

2 Ofificial Statement of the U. S. Food Administration, September 12, 1918, p. 9. 
^ The World's Sugar Supply, National Bank of Commerce in New York, p. 38. 



THE UNITED STATES 239 

supply and to stabilize the price of sugar began almost from 
the very first days of his appointment to the office of Food 
Administrator, on August lO, 191 7. The legislature did not 
give him power to fix prices directly or to purchase sugar, but 
he could declare profits extortionate and could revoke licenses 
of those who, according to him, violated the law. Mr. 
Hoover adopted the plan of entering into voluntary agree- 
ments with producers regarding maximum prices and margins. 
On August 15 he named George M. Ralph as chief of the Sugar 
Division of the Food Administration. On August 16 the 
New York Coffee and Sugar Exchange at Mr. Hoover's sug- 
gestion suspended all trading in sugar for future delivery, 
and shortly thereafter the beet sugar refiners were summoned 
to Washington.'' A number of meetings were held, at which 
the representatives of the domestic beet sugar industry agreed 
to sell the 1917-18 crop of beet sugar at $7.25 cane basis, 
seaboard refining points. 

Under this arrangement the price paid for beet sugar in the 
interior of the country was equal to $7.25, plus the cost of 
transportation from the nearest seaboard refinery ; the further 
from the seaboard the sugar was sold the higher was the 
price; this was in conformity to the practice before the war, 
beet sugar always having been sold at interior points at prices 
to meet the competition of imported sugars, rather than in 
relation to the cost of production. ^ 

According to Mr. Hoover's statement, the basic price of 
$7.25 was arrived at after the examination of costs in various 
factories; the cost was found to range from $4.00 to $7.00 per 
100 pounds and the price agreed upon was such as to permit 
the highest cost producer to continue in business, thus assuring 
the maintenance of a maximum production. On December 
12 the price was changed to $7.35; this change was made in 
order to bring the price of beet sugar in greater conformity 
with the cane basis, as established by an agreement with 

1 R. G. Blackey: "Sugar Prices and Distribution under Food Control," The 
Quarterly Journal of Economics, August, 19 18, p. 568. Also Commercial and Finan- 
cial Chronicle, March 2, 1918, p. 876. 

^ Ibid: op. cit., p. 575. 



240 PRICES AND PRICE CONTROL DURING THE WAR 

Cuban producers. The price was raised to $7.45 on January 
8, 1918, and again in the latter part of June to $7.50.^ 

The distribution of beet sugar was entrusted to a Sugar 
Distributing Committee appointed by Mr. Hoover; this com- 
mittee was composed of representatives of beet sugar pro- 
ducers and brokers of the beet sugar territory of the United 
States. Local representatives of this central organization 
were established at many points throughout the country; 
they allocated the sugar to dealers and saw to it that govern- 
ment regulations were complied with. Sugar was shipped to 
dealers from the nearest factory. All those engaged in the 
business of importing sugar, of manufacturing sugar from 
sugar cane or beets or of refining sugar were required to secure 
on or before October i, 191 7, a license. ^ 

Shortly after an agreement was reached with beet sugar 
factories, steps were taken to bring under control all other 
sugar interests. On September 21, 191 7, the International 
Sugar Committee was created, which included the representa- 
tives of England, France, Italy and Canada, as well as of the 
United States. An international agreement was necessary 
in order to deal with the Cuban situation. The committee 
took charge of the buying and transportation of Cuban sugar 
to the Allies, the neutrals and the American cane sugar refin- 
ers. The sugar set aside for the United States was allotted 
to the refiners by the American Refiners' Committee, com- 
posed of refiners and their sales agents. The subsequent dis- 
tribution of cane sugar was left in the hands of the Food 
Administration. At the time of the appointment of the 
International Committee, the amount of unsold Cuban sugar 
was very small, not over 50,000 tons. In an effort to keep 
down the price for the 191 7-1 8 crop, concerning which the 
Food Administration was then negotiating with Cuban pro- 
ducers, the committee requested the American refiners to 
keep out of the Cuban market. The committee itself did not 
go in its offers to producers beyond $6.90 per 100 pounds, 

^ U. S. Food Administration, Proclamations and Executive Orders by the Presi- 
dent, p. 7. 

* Industrial News Survey, July 1-8, 1918, p. 5. 



THE UNITED STATES 24I 

delivered at New York; this was about $i.oo below the maxi- 
mum price reached in August. While negotiations were 
pending, some of the eastern refiners in Atlantic coast towns 
had to close down for lack of raw sugar. There was also 
a lack of refined sugar and in many places people were 
obliged to pay 12 to 15 cents a pound or more.^ As a result, 
an investigation into the shortage of sugar was instituted by 
the Senate. During the hearings before the Investigating 
Committee in December, 191 7, accusations were made by 
Mr. Claus A. Spreckels that the shortage of sugar was due 
to Mr. Hoover forbidding the purchase of raw material 
at a price higher than the one fixed by the Sugar Committee; 
it was also charged that by announcing a prospective sugar 
shortage Mr. Hoover had caused a panic among consumers, 
with a subsequent hoarding of the staple, and that therefore 
he himself was partially responsible for the shortage. The 
Investigating Committee, under the chairmanship of Senator 
Reed, seemed to be very reluctant in admitting Mr. Hoover's 
statement in defense of his position. The publication of this 
statement was authorized by the President without the per- 
mission of Senator Reed's Committee. In his reply to the 
critics, Mr. Hoover attributed the shortage in the United 
States to the heavy movement of sugar from the western 
hemisphere to Europe. While before the war the exports 
from this hemisphere to the Allies were only about 300,000 
tons annually, the exports to them in 191 7 were about 
1,400,000 tons; but for this fact, according to Mr. Hoover, 
there would not have been any shortage. 

A certain admission that the shortage of sugar in the east 
was due at least in part to price regulations was made by the 
Food Administration when it raised the price of beet sugar to 
$8.15. Committed to a definite price and assured of this 
price all the year round, the beet sugar factories were not 
shipping sugar to the Atlantic seaboard as they ordinarily 
would have done in case of a shortage there. 

Furthermore, the Atlantic coast received much less Louisiana 

1 Commercial and Financial Chronicle, March 2, 1918, p. 876. 



242 PRICES AND PRICE CONTROL DURING THE WAR 

sugar than usual. This was due to several causes: first, the 
prices set enabled the Louisiana producers to dispose of their 
sugar to better advantage by clarifying and washing it on their 
plantations and by selling it in their own State to the manu- 
facturers of confections than by shipping it to the Atlantic 
seaboard refiners; second, a part of the Louisiana crop was 
damaged by frost; third, a larger amount of the Louisiana 
sugar than contemplated was exported to the Allies.^ 

During the negotiations for the 191 7-1 8 crop, the Cuban 
representatives held out for $5.25 f. o. b. Cuban ports, while 
the American representatives were in favor of paying $4.50; 
the average cost of production was found to be $3.38. After 
lengthy negotiations, the deal was finally closed at $4.50 
f. o. b. Cuban ports plus 30 cents per hundredweight for 
freight.^ This price, like the one agreed upon in the case of 
beet sugar and also of the Louisiana cane sugar (the price of 
which was fixed at $6.35 f. o. b. New Orleans) was sufficiently 
high not only to give a good profit to average producers, but 
also to keep in business most of the highest cost producers. 

Sugar refiners agreed to work for a differential of $1.30 per 
100 pounds; before October i, 191 7, the differential was $1.60 
to $2.05.^ The figure of $1.30 was arrived at by taking the 
average margin for five years previous to and including 19 14 
and adding the increased cost of operation which refiners had 
to face.^ The amount agreed upon included the brokerage 
of 3 to 5 cents which refiners pay agents for selling their sugar 
to wholesalers. As to the latter, they were limited in all their 
dealings to their prewar normal profits, which they inter- 
preted to mean in the case of sugar as 25 cents a hundred 
pounds. Retailers were kept within the limits of reasonable 
prices through fear of having their supply of sugar cut off by 
the jobbers as well as through their desire to live up to the 
rulings of the Food Administration. 

' R. G. Blackey: "Sugar Prices and Distribution under Food Control," Quar- 
terly Journal of Economics, August, 1918, p. 590. 

^ Commercial and Financial Chronicle, March 2, 1918, p. 876. 

3 Ibid., June 27, 1918, p. 261 1. 

* U. S. Bureau of Labor, Monthly Labor Review, November, 1917, p. 82. 



THE UNITED STATES 243 

The rationing of manufacturers using sugar began in Octo- 
ber, 191 7, when those producing nonessentials were Hmited to 
50 per cent of their normal requirements. A subsequent 
ruling directed that manufacturers of nonessentials starting 
after April i, 191 8, should be allotted no sugar whatever. 
There was no definite rationing of consumers until the middle 
of 1 91 8. Previous to this date, requests had been made that 
the consumers curtail their consumption of sugar voluntarily. 
The War Emergency Food Survey of August 31, 19 17, so far 
as it related to sugar, showed that the amount of sugar con- 
sumed in the United States for the year ending August 31, 
191 7, was approximately 9,100,000,000 or 88.3 pounds per 
capita, as compared with an average annual consumption of 
the five year period ending in 1916 of 8,300,000,000 or 84.7 
pounds per capita.^ In view of the shortage, the Food Ad- 
ministration suggested at first that the consumption of sugar 
be cut to 67 pounds per person, but it soon realized that such 
a consumption could not be maintained. 

On June 24, 1918, Mr. Hoover issued a statement acknowl- 
edging that the sugar situation was more difficult than the 
Food Administration anticipated at the beginning of the year. 
He assigned as the causes of the difficulty, first, increased ship- 
ping needed by the growing American army in France, which 
necessitated the curtailment of sugar transportation, not 
only from remote markets, but even from Cuba; second, the 
smaller yield than was expected from the accessible sugar 
producing areas, such as certain West Indian Islands, as well 
as from the domestic beet sugar fields and from Louisiana; 
third, the destruction of a number of beet sugar factories in 
the battle areas of France and Italy; fourth, the sinking of a 
considerable amount of sugar by submarines. ^ 

The refiners' reserve stocks, which are in normal times used 
to bridge the gap in the eastern part of the country between 
the end of the arrivals of cane sugar from outside and the 

^ U. S. Dept. of Agriculture, Circular No. 96, Sugar Supply of the United States, 
p. 2. 
2 U. S. Bureau of Labor, Monthly Labor Review, August, 1918, p. 139. 



244 



PRICES AND PRICE CONTROL DURING THE WAR 



arrivals of beet sugar from the Western States, dropped in 
August to about 40 per cent of the normal reserve supply. 
The chart compares the movement of refiners' stocks of raw 
sugar in 191 8 with the preceding year and with the prewar 
average.^ 

REFINERS' STOCKS OF RAW SUGAR 

[In long tons of 2,240 pounds each] 



400,000 
JJS.OOO 
350,000 

izs.ooa 

300,000 
ZJ5,000 
250,000 
ZZS.OOO 
200,000 
175,000 
/50,000 
(25,000 
/ 00,000 

/s,ooo 
so, 000 

25,000 



Jan. F«b. March April May June July Aug. 3ep+. 

^ Official Statement of the U. S. Food Administration, September 12, 1918^ 
pp. 9-10. 











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THE UNITED STATES 245 

A reduction in the consumption of sugar in the United States 
was declared to be a necessity, as only 1,600,000 tons of sugar 
were to be available for distribution in the country until the 
end of the year. According to regulations, which became 
effective on July i, the householders were lim.ited to 3 pounds 
of sugar per month per person, with a special allowance of 25 
pounds of sugar for home canning purposes. This meant a 
reduction of some 25 per cent from normal consumption, but, 
as the Food Administration remarked, it was still nearly 
double the ration in the Allied countries and was ample for 
every economical use. 

In order to secure justice in distribution and to make the 
restrictive plans as effective as possible, no manufacturer or 
wholesaler of sugar was allowed after July i to sell any sugar 
except to buyers who secured a certificate from the local food 
administrators indicating the quantity they were allowed to 
buy. The users of sugar were divided into five classes : 

A. Candy makers, soft drink, chocolate and cocoa manu- 
manufacturers, tobacco manufacturers, makers of flavoring 
extracts, syrups, sweet pickles, etc. 

B. Commercial canners of vegetables, fruits and milk,, 
makers of drugs, explosives, etc. 

C. Public eating places, as hotels, restaurants, boarding 
houses, dining cars, boats, clubs, etc. 

D. Manufacturers of all bakery products. 

E. Retailers and others selling for direct consumption.^ 
Each class was entitled to a certain allotment of sugar for 

the months of July, August and September, 1918, the allot- 
ment varying from 50 per cent of the amount of sugar they 
used in the corresponding months of 191 7 (Class A) to all the 
sugar that the manufacturers required (Class B). 

No sugar was allowed to leather tanners and to manufac- 
turers of nonedibles. 

On July 13, 1918, at the direction of the President, the 
United States Sugar Equalization Board was formed for the 
purpose of better controlling distribution and prices of sugar. 

1 U. S. Department of Labor, Monthly Labor Review, pp. 139-140. 



246 PRICES AND PRICE CONTROL DURING THE WAR 

The board was empowered to purchase, manufacture, sell, 
store and handle raw and refined cane and beet sugar, syrups 
and molasses.^ The Equalization Board entered into an 
agreement with Cuban sugar producers and became the sole 
American purchaser of Cuban sugar at fixed prices. In 191 7, 
48 per cent of the sugar supply of the United States came from 
Cuba; in 1916, out of a total consumption in the United 
States of 3,658,607 tons, 1,666,548 tons were supplied by 
Cuba, and in 191 5 the proportion was: total consumption, 
3,801,531, Imports from Cuba, 1,841,602.2 The government 
expected by controlling the Cuban supply to have an effective 
grip on the sugar industry of the country. The American 
refiners of Cuban sugar agreed to buy raw sugar exclusively 
from the board at fixed prices. 

Toward the middle of 191 8 the sugar refining companies 
applied for an increased differential for refining, claiming that 
increased cost of labor and supplies rendered margins deter- 
mined upon in October, 191 7, inadequate. A committee 
appointed to investigate refining costs reported that an in- 
creased margin was justifiable and it was raised in September, 
1918, from $1.30 a hundred pounds to $1.45. At the same 
time the cane sugar wholesale price was fixed by the Equaliza- 
tion Board at 9 cents a pound, f. o. b. seaboard refining 
points.^ Wholesalers and retailers were to sell on the old 
basis until the exhaustion of their stocks of lower priced sugar. 
The price was raised again in December, 191 8 — this time to 
10 cents a pound. ^ 

In view of a continued shortage of sugar the per capita con- 
sumption of sugar was cut from 3 pounds to 2 pounds per 
month, the reduction to remain in force from August i to 
January i. Other changes in the sugar regulations were the 
Increase of the wholesalers' margin from 25 cents to 35 cents 
per 100 pounds, and the raise in the New York price of Cuban 

1 U. S. Food Administration, Proclamations and Executive Orders by the 
President, p. 30. 

2 Conditions in the Sugar Market, January-October, 1917, The American Sugar 
Refining Co., p. 10. 

^ Commercial and Financial Chronicle, September 14, 1918, p. 1056. 
* Ibid., December 15, 1918, p. 2325. 



THE UNITED STATES 247 

raws by 5 cents per 100 pounds; the latter was done to cover 
extra war risks, after the appearance of a few German sub- 
marines in American waters. 

The handhng of the sugar situation on the whole seems to 
have been conducive to a more equal distribution of sugar 
among the different sections of the country as well as among 
the various classes of the population. Mr. Hoover claimed 
that but for his regulations the price of sugar would have 
soared to 20 and 25 cents per pound retail; this would have 
led to a transfer of over $200,000,000 from consumers to 
profiteers. It is difficult to state what the ultimate effect of 
the fixing of basic prices for raw sugar and of margins to 
refiners and distributors would have had upon the supply of 
sugar had the war and the Food Administration's rulings 
lasted longer than they did. According to a statement issued 
by the Department of Agriculture, there were planted in 191 8 
under sugar beets 689,700 acres; this was 117,000 acres less 
than in 191 7 and 79,000 acres less than in 1916,'' a decrease of 
14 per cent and 10 per cent respectively. 

These figures do not square with those given by the Statis- 
tical Division of the United States Food Administration, 
according to which the acreage and the production of beet 
sugar for the United States were as follows i^ 

Acreage Production 

191 5 611,000 acres 6,511,000 short tons 

1916 665,000 " 6,228,000 " " 

1917 675,000 " 6,237,000 " " 

1918 690,000 " 6,360,000 " " 

According to the same source, the production of cane sugar in 
Cuba rose from 3,369,000 short tons in 1915 to 3,387,000 tons 
in 1916 and to 3,584,000 tons in 1917 (1918 figures were not 
available). In the United States the acreage and the produc- 
tion of cane sugar increased as follows : ^ 

Acreage Production of Sugar 

191 5 183,000 139,000 short tons 

1916 221,000 311,000 " " 

(An obvious mistake; the yield per 

1917 244,000 acre is given as i short ton) 

246,000 short tons 
1 Monthly Crop Reports, July, 1918, p. 70. 

'^ Reference Handbook of Food Statistics in Relation to the War, p. 41. 
3 Ibid., pp. 38-39. 
17 



248 PRICES AND PRICE CONTROL DURING THE WAR 

That the production of raw sugar in those areas upon which 
the United States and the AlHes had to rely for their supply 
has not kept pace with the increased demand is seen from the 
following statement of the Food Administration.' 

Crop of Crop of 

1916-1917 1917-1918 

Cuba, amount available for export 3,265,696 3,571,000 

Hawaii, amount available for export 636,000 553,000 

Porto Rico, amount available for export 478,511 410,000 

United States cane 303,900 243,600 

United States beet 820,657 765-207 



Total 5,504,764 5,542,807 

1 Official Statement of the U. S. Food Administration, September 12, 1918, p. 9. 



CHAPTER VI 
Meat and Dairy Products 

Meat Products 

One of the effects of the war was a reduction in the number 
of meat producing animals in different parts of the world. A 
survey of the situation in 191 7 showed the following results:^ 

Decrease Decrease in other 

Live Stock Western Countries, Includ- Total Net 

Allies ing Enemies Decrease 

Cattle 8,420,000 26,750,000 28,080,000 

Sheep 17,500,000 34,000,000 54,500,000 

Hogs 7,100,000 31,600,000 32,425,000 

Total 33,020,000 92,350,000 115,005,000 

The decrease in the world's herds was due to a great demand 
for meats combined with difficulties of importing fodder and 
to diversion of some grains to uses directly as food for man 
instead of as fodder. ^ 

Europeans have always relied to some extent upon the 
United States for pork products; the war brought about a 
situation among the Allies which called for an ever increasing 
demand for overseas meat supplies of every kind. American 
exports rose from 493,848,000 pounds, the three year prewar 
average, to 1,339,193,000 pounds in 1915-16, 2, 166, 500 pounds 
in 1916-17 and to 3,011,000,000 pounds during the fiscal year 
ending June 30, 1918.^ 

Hogs 

The number of hogs in the United States, which dropped 
from 65,620,000 in 191 1 to 58,933,000 in 1914, began to rise 
again after the outbreak of the war; the number increased to 
64,618,000 in 191 5. However, by the end of 191 7, conditions 

1 Herbert Hoover: "Grain and Live Stock," U. S. Food Administration Bulle- 
tin No. 10, p. 10. 

* G. B. Roorbach: "The World's Food Supply," Annals of the American 
Academy of Political and Social Science, November, 1917, p. 27. 

^ Official Statement of the U. S. Food Administration, August 22, 1918, p. I. 

249 



250 PRICES AND PRICE CONTROL DURING THE WAR 

in the hog industry were far from satisfactory ; the amount of 
hogs decHned to about 60,000,000 head. One of the most 
disquieting symptoms was the ruthless slaughtering of ani- 
mals in 1916-17.^ 

Three-year Fiscal 

prewar year 

average 19 16-17 

Hog population Jan. i 61,600,000 67,450,000 

Number of hogs slaughtered 53,204,000 64,798,000 

Per cent of hogs slaughtered 86 .3 96 . i 

Average live weight in pounds 219.21 211 .26 

Exports of pork products in pounds 992,885,000 1,501,271,000 

Domestic consumption in terms of pounds of pork 

products per capita 72 . 08 75-77 

The table shows that whereas the three year prewar aver- 
age of slaughtered hogs was 86.3 per cent the percentage rose 
to 96.1 for the fiscal year 191 6-17; the average weight of the 
slaughtered animal had fallen at the same time from 219 to 
211 pounds. 

There was a great deal of dissatisfaction among hog pro- 
ducers due to the fact that the price of feed, particularly of 
corn, had been rising more rapidly than the price of hogs; 
notwithstanding an increased demand for hog products the 
producers received in some instances less for the hogs than the 
price of the feed used in the production of the animals. The 
highest price for hogs in the Chicago market in 19 14 was 
$10.20 per 100 pounds. The price did not begin to advance 
until 191 6, when it rose to |ii.6o, the most pronounced rise 
occurring after the United States entered the war. On August 
21, 191 7, hogs were quoted in Chicago at $20.00 per hundred 
pounds. 

It was evident to the Food Administration that the pro- 
duction of hogs was not keeping pace with home consumption 
and with the exportation of hog products. Accordingly, on 
November 8, 1917, Mr. J. P. Cotton, chief of the Food 
Administration Meat Division, issued a statement in which 
he outlined the future policy of the Administration relative to 
the prices of hogs. He pointed out the necessity of stabilizing 
the price, so that the farmer should know where he stands and 

U. S. Food Administration, Bulletin No. lo, p. 12. 



THE UNITED STATES 25 1 

should be justified in increasing hogs for next winter. The 
statement contained a promise that the prices so far as the 
Food Administration could affect them would not go below a 
minimum of $15.50 per hundred w^eight on the Chicago mar- 
ket. The difference between the minimum price for hogs 
which became effective on November 10, 1917,^ and the mini- 
mum price for wheat was that in the latter case the minimum 
was guaranteed and the guarantee was backed by the pur- 
chasing activity of the Grain Corporation, while in the case 
of hogs the minimum merely expressed the intention on the 
part of the government to use its influence in keeping up the 
price. 

Four days after the fixing of the minimum the special com- 
mission appointed by the Food Administration to determine 
the cost of hog production in bushels of corn made public 
the results of its investigation. It found that for ten years 
ending with 1916 hog production had been maintained on 
a ratio of 1 1.67 bushels of corn to one hundred pounds of hog. 
The commission doubted that such a ratio yielded any profit 
to hog raisers and it indicated that in order to bring swine 
production back to normal an equivalent valueof 13.3 bushels 
of corn per one hundred pounds of hog was necessary. As an 
emergency measure it recommended a minimum price of 
$16.00 per hundredweight, the price to vary subsequently in 
accordance with the variation of the price of corn. Acting 
upon the recommendation of the commission, the Food 
Administration announced that it would attempt to secure 
for the farmer a price for every 100 pounds of hogs equal to 
the average price of 13 bushels of corn as it prevailed during 
the hog raising period. This ratio has never received a real 
trial and it is difficult to tell what would have been the results 
of its application on the production and on the price of both 
corn and hogs. 

The packers' views on this matter were expressed in a 
letter to the Food Administration sent in October, 191 8, 
which reads in part as follows :- 

^ Commercial and Financial Chronicle, November 10, 1917, p. 1850. 

^ Official Statement of the U. S. Food Administration, November i, 19 18, p. 7. 



252 PRICES AND PRICE CONTROL DURING THE WAR 

The 13 to I "basis fixes what might prove an unduly high 
price on hogs at the starting of the packing season and provides 
for a gradual reduction in prices, and a normal descending 
corn market would result in the lowest prices probably being 
arrived at in the spring of the year, whereas the ordinary course 
of the market is the reverse. This plan may result in the 
warehouses being filled up with high priced products even 
though the Allied orders are very considerably increased, as 
the Allied requirements only take certain cuts produced from 
certain weight choice hogs, and the Allied orders do not pro- 
vide an outlet for the cuts of all kinds of hogs." 

The minimum price for hogs was fixed in October at $17.50 
per hundredweight. This was done "in execution of the de- 
clared policy of the Food Administration to use every agency 
under its control to secure justice to the farmer."'' 

One of the reasons why so much attention has been given to 
hog products lies in the fact that increased production in pork 
fats may be accomplished much more rapidly than increased 
production of either dairy or vegetable fats;^ there was an 
urgent need for fats on the western battle front. As Mr. 
Hoover has put it tersely, "if we discontinue exports (of fats), 
we will move the German line from France to the Atlantic 
seaboard." To meet the increased demand both at home and 
abroad the stimulation of the production of fats was deemed 
by the Food Administration an absolute necessity; it concen- 
trated its attention on hogs because no fat producing crop 
responds more quickly than does the hog crop.^ 

Cattle 

There has been a steady decline in the number of cattle in 
this country, the amount having dropped from 56,592,000 
head in 1907 to 40,850,000 at the beginning of 1917.^ In 1914 

^ Official Statement of the U. S. Food Administration, November i, 1918, p. 7. 

^ Food Administration, Bulletin No. lo, p. lo. 

^ Ibid., No. 9, p. 7. 

* Food Administration, Bulletin No. 9, p. 7. These figures apparently do not 
include milk cows. The Reference Handbook of Food Statistics in Relation to the 
War (Statistical Division, Food Administration) places the number of cattle on 
January i, 1918, at 66,830,000. 



THE UNITED STATES 253 

the United States had 20,739,000 dairy cows and 35,855,000 
other cattle, or 56.5 heads per 100 of population as compared 
with 90.6 per 100 of population in 1890. 

There Is no dominant feed for cattle as there Is for swine, 
therefore no attempt could be made to stimulate production 
by establishing a ratio between beef and feed, as has been 
done in the case of hogs. One of the important measures 
which had been taken in order to help the cattle raising indus- 
try was the licensing of all manufacturers of and dealers in 
bran, coarse grains and various kinds of commercial feeds. 
Hoarding and speculation were thus brought under control. 
A concrete Illustration of how the Food Administration dealt 
at the end of 191 7 with the Texas situation will show plainly 
the methods used and the accomplished results. With the 
price of cottonseed cake up to seventy dollars a ton from a 
normal figure of forty-five dollars a ton, many cattle raisers 
had not thought it worth while to save the cattle, which 
owing to the drought during the month of October and 
November, 191 7, began to starve on their ranges. Mr. Hoover 
brought together the cattle men and the cottonseed people. 
After some bitter debate a price of $50 for cottonseed cake 
was fixed. The fixing of an equitable price did not, however, 
end the trouble, as most of the crop was under contract 
to be shipped to the dairy cattle men in the north. To insure 
a sufificient supply for the Texas cattle, the Food Adminis- 
tration requested the Railroad War Board to put an embargo 
on the export out of Texas of cottonseed cakes, the feeders 
and dairymen outside of the drought stricken district of the 
Southwest being directed to secure their cottonseed cake and 
meal from Arkansas, Louisiana and points east of the Missis- 
sippi River.'' All the cottonseed which was to have gone to 
neutral countries was seized by the Food Administration, the 
War Trade Board having been asked to prohibit the export 
of cottonseed except by license. 

In the corn belt the situation was aggravated by the inade- 

1 D. Lawrence: "As Mr. Hoover sees it," The Country Gentleman, December 
29, 1917, p. 29. 



254 PRICES AND PRICE CONTROL DURING THE WAR 

quacy of transportation facilities. In February, 1918, Mr. 
A. Sykes, president of the Corn Belt Meat Producers' Asso- 
ciation, called the attention of the Senate Agricultural Com- 
mittee to the fact that for weeks the meat producers were 
compelled to keep their fattened cattle and hogs, feeding 
them continually, while the prices of foodstuffs soared and the 
reserve seed stock diminished. According to him, 75 per cent 
of live stock in the corn belt of the middle west was unmarket- 
able at the time because there were no cars to move it. Mr. 
Sykes accused the Food Administration of having been too 
slow and expressed dissatisfaction at not having practical 
live stock men or farmers in the organization. Prompt re- 
medial action was urged by him as well as by others who 
appeared before the Agricultural Committee. 

In August, 1918, meat dealers, hotels, public institutions 
and housewives were urged by the Food Administration to buy 
light weight cattle which were coming on the market from the 
drought affected regions of Texas and Oklahoma. The heavier 
grades were needed for the army and navy and for the Allied 
army, and the purchase of lighter beef by domestic consumers 
was advocated so as to maintain a reasonable average price 
for light weight cattle and at the same time secure for domes- 
tic use supplies of meat at prices very much cheaper than that 
demanded for heavy beef.^ 

Control of the Meat Packing Industry 
While conferring with the meat packers in Chicago during 
the latter part of August, 191 7, Mr. Hoover assured them he 
had no intention of fixing the price of beef and pork products, 
as had been unofficially announced, but that he hoped "to 
develop by discussion with representative committees of the 
hog producers, the cattle producers, the commission men and 
the packers greater stabilization of the industry during the 
war, and in such a way as to encourage production, to elimi- 
nate speculative profits and risk, so far as may be, and by so 
doing to protect the consumer. "^ 

1 Ofificial Statement of the U. S. Food Administration, September 12, 1918, p. 13. 

2 Monthly Review of the U. S. Bureau of Labor Statistics, November, 1917, p. 83. 



THE UNITED STATES 255 

The packers' committee on September 12 expressed the 
approval of the government plan to place the packing indus- 
try under license; and it assured the Food Administration of 
its desire to cooperate in working out the problems arising 
out of the war. 

On December 8, 1917, the rules and regulations for controll- 
ing of slaughtering and meat packing industries were made 
known. Every detail of the meat business was put under 
government supervision. Maximum profit was fixed at ' 

9 per cent on investment ^^ for packers doing an annual business exceeding 
15 per cent on investment / $100,000,000 

2^% on gross value of sales for smaller packers. 

The "meat business" was defined as including all foods of 
animal origin, fresh or prepared, also operation of cars and 
marketing branches and all immediate by-products of live 
stock such as hides, wool, fat, bones, offal and tankage, but 
not the manufactured specialty products. Elaborate regu- 
lations and accounting were provided to make sure that the 
meat profit was not diverted or concealed in the specialty 
business, the main purpose of these regulations being the 
protection of small packers against their powerful competi- 
tors. ^ To control the packers, a Meat Division was estab- 
lished, under Joseph P. Cotton, with headquarters at Chicago. 

The limiting of profit on investment was protested by five 
of Chicago's largest packers. Armour & Co., Cudahy & Co., 
Morris & Co., Swift & Co. and Wilson & Co., who contended 
that it would affect adversely their borrowing capacity and 
would prevent the necessary plant expansion.^ Mr. Hoover 
in his reply stated that Investigations showed that prewar 
earnings of the companies were less than 9 per cent, and 
that the packers' request for increase was tantamount to their 
asking that consumers pay for plant expansion. 

The Federal Trade Commission, which conducted an ex- 
haustive investigation Into the slaughtering and meat pack- 
ing business, came to the conclusion that the big packers 

1 Commercial and Financial Chronicle, March 2, 1918, p. 877. 

^ G. Soule: "The Control of Meat," The New Republic, February 2, 19 18, p. 14. 

^ Commercial and Financial Chronicle, December 15, 1917, p. 2325. 



256 PRICES AND PRICE CONTROL DURING THE WAR 

dominated prices both of the Uve stock and of the meat prod- 
ucts. It charged them with illegal profiteering. The packers 
pointed out that their profits were only a fraction of a cent 
on a pound of meat and that therefore they could not be held 
responsible for high meat prices. ^ 

Dairy Products 

Milk 

The price of milk began to go up in various large cities of 
the country in the autumn of 1916. One advance after 
another took place until in October, 191 7, milk was selling in 
New York at 14 cents a quart retail,- as compared with 9 
cents in September, 191 6. During the same period the price 
went up in Chicago from 8 cents to 13 cents a quart. 

In an attempt to solve the problem of milk prices, the Food 
Administration set up regional commissions on which pro- 
ducers, consumers, distributors and milk experts were repre- 
sented. Leading citizens of each community were selected 
to serve on these federal boards, and public hearings at which 
all interested parties were given an opportunity to present 
facts bearing on prices were held at various places throughout 
the country.^ 

No uniform national price could be established, because of 
great variations in the costs of production and distribution 
territorially. 

The situation in Chicago may be considered as represen- 
tative of the whole movement dealing with milk prices. A 
study of this situation gives an insight into what were the 
conditions in the production and distribution of milk which 
led to the rapid advance in the price of this essential and in- 
dispensable food product. The dominant factors in Chicago 
were the rise of the large dealer or distributor and the estab- 
lishment of the Milk Producers' Association (an organization 

^ E. Wildman: "Our Daily Meat," The Forum, November, 1910, p. 587. 
2 The Literary Digest, October 20, 1917, p. 12. 

^ D. Lawrence: "As Mr. Hoover sees it," The Country Gentleman, December 
29, 1917, p. 29. 



THE UNITED STATES 257 

of over 16,000 dairymen) in order to cope with the concen- 
trated control of distribution.^ 

In 1893 there were 2,700 distributors of milk in Chicago; 
the number declined in 1906 to 1300 and in 1917, to 688, two 
of which controlled about 40 per cent of the city's milk busi- 
ness. The basic standard price which the dealers paid just 
before the Milk Producers' Association made its full strength 
felt, in the spring of 1917, was $1.55 per hundred pounds. In 
April, 191 7, the dealers had to submit to the farmers' demands 
for increase in price, which was raised from $1.55 to $2.12 
per hundred pounds for the summer months (May to Septem- 
ber) f the consumers' price was advanced at the same time to 
10 cents a quart. When it came to the fixing of the price for 
the winter milk, to begin on October i, 191 7, the producers 
made a demand for $3.42 per hundred pounds, claiming that 
only at such a price would they be able to produce milk during 
the feeding season. The distributors protested, but had to 
submit to the demands of the producers. The price of $3.42 
was fixed at the urgent appeal of the Food Administration to 
the farmer for the month of October only, the Administration 
having promised that it would attempt to regulate the price 
of dairy feeds. The retail price of milk went up to 13 cents a 
quart, which caused a great deal of agitation in the public 
press and among the consumers. When in the end of October 
the time came for the renewal of the contract between pro- 
ducers and dealers, the latter refused to sign unless the price 
was reduced. The Milk Producers' Association threatened to 
stop the shipment of milk to Chicago. The State Food Admin- 
istrator interfered at this juncture, appointing an arbitration 
commission, whose duty it was after an investigation to name 
a price for milk to be paid to producers, which price "would 
cover the cost of production and a reasonable profit thereon," 
also the retail price to be paid to distributors, based upon 
"the cost of distribution and a reasonable profit to the dis- 

1 C. S. Duncan: "The Chicago Milk Inquiry," Journal of Political Economy, 
April, 1918, pp. 322-323. 
^ Ibid., p. 324. 



258 PRICES AND PRICE CONTROL DURING THE WAR 

tributor."' It was agreed that pending the investigation the 
producers would accept $3.22 per hundred pounds and the 
distributors would retail the milk at 12 cents a quart. 

A mass of data was presented to the commission by dairy- 
men, bankers, dairy experts, distributors of milk and members 
of the dairy departments of agricultural colleges. In arriving 
at its decision, the commission assumed that in each hundred 
pounds of milk produced there enter 19 per cent home grown 
grains, 19 per cent mill feeds, 35 per cent hay, 2'] per cent 
labor. Acting on this assumption, and having taken into 
consideration the increased price of feeds and labor, the com- 
mission, on February 2, declared that the following prices 
should be paid to the dairymen: February, $3.07; March, 
$2.83; April, $2.49; May, $2.04; June, $1.80. 

The price to consumers was left at 12 cents a quart. Six 
out of nine commissioners concurred in the decision, which 
was immediately declared by the producers to be not accept- 
able to them. Two representatives of the federal Food 
Administration were called in to review the findings of the 
commission. In the meantime, one of the commissioners, 
Dean Davenport of the College of Agriculture of the Univer- 
sity of Illinois, seceded from the commission and in an open 
letter to the State Food Administrator expressed his disap- 
proval of its findings. The commission which met on Febru- 
ary 21 for review reaffirmed the conclusions of the first deci- 
sion and for the month of February the price to producers as 
set by the commission remained in force. 

Upon arrival of the two representatives from Washington^ 
efforts were made to reach a satisfactory adjustment. On 
March i an agreement was concluded with the producers by 
means of which they were to receive the price of $3.10 per 
hundred pounds for the month instead of $2.83, as determined 
by the first findings of the commission. The dealers consented 
to pay this higher price without raising the price to the 
consumer. Prices for the succeeding months were to be 

1 C. S. Duncan: "The Chicago Milk Inquiry," Journal of Political Economy y 
April, 1918, p. 326. 



THE UNITED STATES 259 

determined on the basis of the prices published by the De- 
partment of Agriculture J 

Butter 

The average price of creamery butter for 1913 was 29.69 
cents per pound, in Chicago; in July, 1914, it was 25.56 cents, 
about the same as in July of the previous year, the price of 
butter being usually somewhat lower during the summer 
months. There was no advance in the price during 191 5 and 
the average for the year was lower than for 19 14, namely, 
27.43 cents a pound. The rise began in the autumn of 191 6, 
and by December of that year butter was quoted in the 
Chicago market at 37.31 cents a pound; it has never gone 
much below this figure since, the lowest quotation being 36.81 
cents in January, 1917, and 37 cents in July, 1917. In Decem- 
ber, 1 91 7, butter sold at 46.75 cents, and the average price 
for the year was 40.34 cents; the continued advance through 
1918 brought the price up to 55.25 cents a pound in October. ^ 

Until the early part of 191 8 the Food Administration made 
no attempt to establish maximums or to fix any definite prices 
for butter, its control having been confined to the elimination 
of speculation. With this aim in view, it promulgated a set 
of rules governing transactions on the butter exchanges 
during the war (November 15, 1917).^ 

On January 19, 1918, the Food Administration announced 
the following wholesale prices for storage creamery butter i^ 

1. New York and other points in seaboard territory: 47 
cents a pound "for the remainder of the season" (about two 
months). 

2. Chicago: 45^ cents a pound till February i, when the 
price was to be advanced one-fourth of a cent on the ist and 
15th of each month until all creamery butter was released from 
storage. 

These prices were established with the voluntary coopera- 
tion of the butter trade. 

1 C. S. Duncan: "The Chicago Milk Inquiry," Journal of Political Economy, 
April, 1918, pp. 341-344. 

2 War Industries Board, Bulletin of Monthly Prices during the War, November, 
1918, p. 39. 

2 Commercial and Financial Chronicle, March 2, 1918, p. 877. 
* Ihid., February 2, 1918, p. 446. 



26o PRICES AND PRICE CONTROL DURING THE WAR 

Comprehensive regulations governing margins which dealers 
in butter could add to the cost price were promulgated in 
June, 1918. According to these regulations, licensees dealing 
in cold storage butter were requested to sell it at a price based 
on actual cost, not on replacement cost, the actual cost in- 
cluding purchase price, transportation charges, storage and 
insurance charges, interest during storage period and cost of 
printing. Costs were not to include allowances for shrinkage 
in weight, commissions or other expenses not listed above. 

Maximum margins which dealers were allowed to add to 
cost price were on : 

Carloads i cent per pound 

Lots between 7,000 pounds and a car load ij cents per pound 

700 to 7,000 pounds if cents per pound 

Less than 700 pounds 2f cents per pound 

These margins for sales of amounts less than 7,000 pounds 
were changed on July 19 to 2 cents per pound for 3,500 to 7,000 
pounds, 25 cents per pound for 700 to 3,500 pounds, 3 cents per 
pound for less than 700 pounds, but amounting to 100 pounds 
or more, and 3f cents per pound on sales of less than 100 
pounds.^ Commissions were limited to three quarters of a 
cent per pound. Attention of the licensees was called to the 
provision that "the licensee in selling food commodities shall 
keep such commodities moving to the consumer in as direct a 
line as practicable and without unreasonable delay." Resales 
within the same trade without reasonable justification, es- 
pecially if tending to result in a higher market price to the 
retailer or consumer, were dealt with as an unfair practice. 

Cheese 
Governmental control of cheese prices did not begin until 
June, 1 91 8, when the Food Administration issued regulations 
governing manufacturers, dealers, brokers and commission 
merchants making or handling cheese. These regulations 
were the result of conferences between the representatives of 
the cheese trade and the officials of the Food Administration. 
No limitation was placed on the price to be received by the 
farmer. Commissions on the sales of American or Cheddar 



Monthly Labor Review, September, 1918, p. 599. 



THE UNITED STATES 261 

cheese were limited to ^ cent per pound, and the following 
margins of advance were established for intermediate mer- 
chants between the manufacturers and the retailers : 

On car lot sales f cents per pound 

Less than car lot, but not less than 7,000 pounds i j cents per pound 

500 to 7,000 pounds if cents per pound 

Less than 500 pounds 3 cents per pound 

On cheese stored more than 30 days a maximum of | cent per 
pound could be added each month, total not to exceed i cent.' 

In July the margins were modified on lots smaller than 7,000 
pounds, being "made wide enough to provide for exceptional 
cases where the cost of doing business was high."^ The mar- 
gins were: if cents on 4,000 to 7,000 pound sales; 2| cents 
on sales of 1,000 to 4,000 pounds; 3 cents on sales between 
100 and 1,000 pounds; and 3^ cents on sales less than 100 
pounds. These were maximum margins and a dealer was not 
allowed to charge the limits if by doing so he made an ex- 
cessive profit. 

New regulations, this time covering all important kinds of 
cheese, including such foreign types as Swiss, brick, limburger 
and Munster were issued in August; they supplanted all the 
former rules. The selling price of cheese had to be based on 
actual cost plus reasonable profit without regard to market 
or replacement value. ^ Cost for the purpose of this rule in- 
cluded (i) purchase price, (2) transportation charges, if any, 
(3) storage charges actually incurred, (4) insurance charges, 
(5) interest on money invested at the current rate, (6) actual 
cost of paraffining, if any, not to exceed one-fourth cent per 
pound. 

Under the above ruling, the Retail Section of the Distribu- 
tion of Perishables of the United States Food Administration 
investigated the cost of handling cheese at retail and deter- 
mined that in selling American or Cheddar cheese any advance 
in excess of 6 or 7 cents per pound over cost was unreasonable.^ 

Kinds of cheese not mentioned in the rules came under 
general rules in respect to excess profits. 

1 Commercial and Financial Chronicle, June 22, 1918, p. 261 1. 

^ Monthly Labor Review, September, 1918, p. 124. 

^ Commercial and Financial Chronicle, August 10, 1918, p. 559. 

* Official Statement of the U. S. Food Administration, October i, 1918, p. 17. 



CHAPTER VII 

Fuel 

Coal 

During the first two years of the war the coal situation in 
the United States was not materially different from what it 
had been before the outbreak of hostilities in Europe. Keep- 
ing pace with a growing demand, production rose from 513,- 
522477 tons in 1914, to 531,619,487 tons in 1915 and to 590,- 
098,175 tons in 191 6. Due to war activities and to traffic 
congestion, a local shortage of coal occurred in some parts 
of the country during the autumn and winter months of 
191 6-1 7. This shortage caused hardships to many house- 
holders and difficulties in industrial plants. A panic developed 
with its concomitant rush on the part of consumers to purchase 
coal at any price. ^ Bituminous coal was selling in the year 
ending December 31, 1916, at from $1.25 to $1.50 per ton at 
the mines. Prices began to advance during the latter part of 
that year. They rose sharply in the early months of 191 7, 
reaching in the summer the unprecedented height of $7 and 
$8 per ton. Public dissatisfaction, which had been aroused 
long before this by price increases made by anthracite op- 
erators in the beginning of 191 6,- became most pronounced 
and widespread. The government felt that something had 
to be done in order to bring prices under control. 

In pursuance of the Hitchcock resolution introduced in the 
Senate on June 22, 1916, an investigation into the produc- 
tion, distribution and cost of anthracite coal had been carried 
on by the Federal Trade Commission during the fall and 
winter of 1916-17.^ The commission in the course of this 

1 Methods of Fixing Prices of Bituminous Coal Adopted by U. S. Fuel Admin- 
istration, Publication No. 29, September 20, 1918, p. 141 1. 

2 W. Notz: "The World's Coal Situation during the War," Journal of Political 
Economy, July, 1918, p. 674. 

3 Ibid. 

262 



THE UNITED STATES 263 

inquiry soon discovered that an independent investigation 
of the anthracite coal situation was not feasible, as a close 
connection exists between the use of anthracite and of bitu- 
minous coal, one kind of coal being substituted for another 
with increased demand and rising prices. 

The report of the Federal Trade Commission was sub- 
mitted to Congress on June 20, 191 7. According to this re- 
port, the large railroad companies had only slightly increased 
their basic prices at the mines; a much greater advantage of 
the market situation was taken by a number of independent 
operators who raised their prices from $1.00 to $5.00 a ton. 
Blame was also placed upon the jobbers, the majority of 
whom averaged double or treble their normal gross profits. 
Conditions in the retail coal market were found to differ 
materially in various parts of the country. Thus while the 
coal dealers in Minneapolis, St. Paul, Milwaukee and Buf- 
falo had not taken undue advantage of the crisis, those in 
Chicago and in Boston had increased their gross margins by 
as much as $1.50 or $1.75 per net ton.^ 

The commission came to the conclusion that those coal- 
operating companies whose books had been audited were not 
justified in their increase of prices by the increase in cost. 

An investigation into the conditions of the bituminous coal 
industry was conducted by the Federal Trade Commission 
simultaneously with its investigation of the anthracite coal 
situation. On June 19, 1917, the commission reported to the 
House of Representatives^ that in its opinion the coal indus- 
try was suffering from inadequacy of transportation facilities, 
which curtailed output and thus produced a shortage of coal. 
The commission recommended in a majority report (i) that 
the production of coal and coke be conducted through a pool 
in the hands of a government agency; that the producers of 
various grades of fuel be paid their full cost of production plus 
a uniform profit per ton (with due allowance for quality of 

1 W. Notz: op. cit., p. 675. 

2 Report of the Federal Trade Commission on Anthracite and Bituminous 
Coal, June 20, 1917, p. 18. 

18 



264 PRICES AND PRICE CONTROL DURING THE WAR 

product and efficiency of service), (2) that the transportation 
agencies of the United States, both rail and water, be similarly 
pooled and operated on government account under the direc- 
tion of the President, and that all such means of transporta- 
tion be operated as a unit, the owning corporations being paid 
a just and fair compensation which would cover normal net 
profit, upkeep and betterments. 

In the summer of 1917 the handling of the coal situation 
was entrusted to a Committee for National Defense, headed 
by Mr. Peabody, a well known coal operator. This com- 
mittee soon after its establishment reached an agreement with 
the operators, by which the flat price for bituminous coal 
was set at $3.00 per ton at the mines. ^ This price was immedi- 
ately repudiated by Secretaries Baker and Daniels as being too 
high. 2 Their stand found an almost unanimous support in 
the popular press, which took the occasion to discredit at the 
same time all other activities of the coal experts. 

The summer months of 191 7 went by without any definite 
settlement of the price question. Because of the uncertainty 
of these months, operators withheld from maximum produc- 
tion, thus paving the way for the subsequent shortage of coal. 
The realization of the fact that the coal situation was growing 
in acuteness led to the insertion into the Food Control Bill, 
while it was being discussed in the Senate, of a section giving 
the President sweeping powers concerning coal. 

The act provided that "the President of the United States 
shall be empowered, whenever and wherever in his judgment 
necessary for the efficient prosecution of the war, to fix the 
price of coal and coke, wherever and whenever sold, either by 
producer or dealer, to establish rules for the regulation of and 
to regulate the method of production, sale, shipment, distribu- 
tion, apportionment or storage thereof among dealers and 
consumers." 

^ Report of the Federal Trade Commission on Anthracite and Bituminous Coal^ 
June 20, 1917, pp. 20, 21. 

2 Commercial and Financial Chronicle, July 7, 191 7, p. 20. Mr. Daniels an- 
nounced that the Navy would continue to buy at $2.33 a ton, leaving the price 
to be determined after the Federal Trade Commission had ascertained produc- 
tion costs. 



THE UNITED STATES 265 

The President was empowered, in case any producer or 
dealer failed or neglected to conform to the President's prices 
or regulations, to requisition the plant, business and all 
appurtenances thereof belonging to such producer or dealer. 
He was authorized to operate such plants through an agency 
selected by him, paying the owner a just compensation.^ He 
was also authorized if he deemed it necessary to require coal 
producers to sell their products only to the United States 
through an agency designated by him, "such agency to regu- 
late the resale of coal and coke, the prices thereof as well as 
the methods of production, shipment, distribution, appor- 
tionment and storage." 

The prices to be paid were to be based upon a fair and 
just profit over and above the cost of production, including 
proper maintenance and depreciation charges. The reason- 
ableness of such profits and cost of production was to be de- 
termined by the Federal Trade Commission. 

Acting under the authority of this act, the President fixed 
on August 21, 1917, a schedule of provisional bituminous coal 
prices, for the sale of coal not under contract; on August 23 
he fixed in a similar way prices for anthracite coal. On the 
same date Mr. Harry A. Garfield was appointed United 
States Fuel Administrator. 

The President's prices for bituminous coal were specified 
for run-of-mine, prepared sizes and slack or screening; they 
were fixed by States and in a few instances by districts and 
by seams. These prices were based on average figures on 
about 100,000,000 tons production, prepared by the Federal 
Trade Commission "from the very meager data in its pos- 
session, generally from the larger and lower cost operators of 
each district. "2 

According to the President's proclamation, the provision- 
ally fixed prices were based upon the actual cost of production 
and were deemed to be not only fair and just but liberal as 
well. They were as follows : ^ 

^Public Act, No. 41, 65th Congress (H. R. 4961), pp. 9-10. 

^ U. S. Fuel Administration Publication No. 2g, September 20, 1918, p. 1412. 

^ Official Bulletin, vol. i, No. 88, August 22, 1917, p. i. 



266 



PRICES AND PRICE CONTROL DURING THE WAR 



Prepared Slack or 

Run of Mine Sizes Screenings 

Pennsylvania $2.00 $2.25 $i-75 

Maryland 2.00 2.25 1.75 

West Virginia 2.00 2.25 1.75 

West Virginia (New River) 2.15 2 .40 i .90 

Virginia 2.00 2.25 1.75 

Ohio (thick vein) 2.00 2.25 1.75 

Ohio (thin vein) 2.35 2.60 2.10 

Kentucky 1.95 2.20 1.70 

Kentucky (Jellico) 2.40 2.65 2.15 

Alabama (big seam) 1.90 2.15 1.65 

Alabama (Pratt, Jaeger, and Corona) . . 2.15 2 .40 i .90 

Alabama (Cahaba and I31ack Creek) ... 2 .40 2 .65 2.15 

Tennessee (eastern) 2 .30 2 .55 2 .05 

Tennessee (Jellico) 2 .40 2 .65 2.15 

Indiana 1-95 2.20 1.70 

Illinois 1.95 2.20 1.70 

IlHnois (third vein) 2.40 2.65 2.15 

Arkansas 2.65 2.90 2.40 

Iowa 2.70 2.95 2.45 

Kansas 2.55 2.80 2.30 

Missouri 2.70 2.95 2.45 

Oklahoma 305 3.30 2.80 

Texas 2.65 2.90 2.40 

Colorado 2.45 2.70 2.20 

Montana 2.70 2.95 2.45 

New Mexico 2.40 2.65 2.15 

Wyoming 2.50 2.75 2.25 

Utah 2.60 2.85 2.35 

Washington 3-25 3 -SO 300 

Note. — Prices are on f. o. b. mine basis for ton of 2,000 pounds. 



The order fixing anthracite coal prices enumerated sixteen 
most important producers (the railroad companies' mines) to 
whom the measure applied ; others (the so-called independent 
operators' mines) were permitted to charge higher prices 
provided they did not exceed the scheduled prices by more 
than 75 cents per ton. The prices were maximum prices per 
ton of 2,240 pounds free on board cars at the mines and they 
varied in accordance with the grades and sizes of coal as 

follows : 

Whi 
$ 

4- 

4- 

4- 



Broken . . 

Egg 

Stove . . . 
Chestnut 
Pea 



e Ash 


Red Ash 


Lykens Yi 


•55 


$4^75 


$5.00 


•45 


4^65 


4.90 


.70 


4.90 


5 30 


.80 


4.90 


5 30 


.00 







The price of White Ash pea coal was reduced by the Fuel 
Administrator on October i, 191 7, to $3.40; a price of I3.50 



THE UNITED STATES 267 

for Red Ash pea coal and of $3.75 for Lykens Valley pea coal 
was established at the same time. 

The President's prices were subsequently added to and 
revised at different times by the Fuel Administrator; special 
prices were fixed for individual mines, for special coal fields 
or districts, as well as for different States. Most of these 
revisions raised prices ostensibly because of wage increases to 
mine workers, but also in order to assure greater profit to 
mine operators. The most important of these increases was 
one provided by an order of October 27, 1917, which raised 
the price of bituminous coal by 45 cents per ton above the 
President's prices, and another which increased the price of 
anthracite coal by 35 cents a ton on December i, 191 7.' 

The plan adopted by the Fuel Administrator was to fix 
prices so that each operator should receive a limited profit. 
Hence the price was fixed relatively low for coal from thick 
seams, easily and cheaply mined and high for the thin and 
poor seams, the cost of mining from which is much greater. 
In the fixing of prices, very inefftcient small mines, remote 
from transportation facilities, were not considered. While 
differences in prices existed for coal of equal grade, the larger 
part of the variations in the prices announced for bituminous 
coals were due to difference in quality of coal and to freight 
differentials. 2 

On December 15, 191 7, export and foreign bunker coal 
prices were fixed at $1.35 per ton above the domestic scale; 
this order applied to all countries except Mexico and Canada.^ 
The seller of the coal or such other agency as performed the 
actual work of bunkering or loading was allowed to add the 
customary or proper charges for storage, towing, elevation, 
trimming, special unloading and other port charges. An 
amendment to the order issued on February 25, 191 8, pro- 
vided that no coal could be invoiced at the excess price except 
by the operator or dealer who actually loaded it into foreign 

1 Commercial and Financial Chronicle, December 8, 191 7, p. 2228. 

2 C. R. Van Hise: Conservation and Regulation, p. 152. 

^ U. S. Fuel Administration, Publication No. 15 (Revised). 



268 PRICES AND PRICE CONTROL DURING THE WAR 

vessels and only after the coal had been so loaded. The 
amendment stipulated also that in settling the price of coal 
for foreign bunkering or export purposes, no jobber's margin 
or other commission in addition to the $1.35 per ton should 
be added to the price of the coal. 

A cut of 10 cents per ton in the price of bituminous coal was 
made on May 25, 1918. The reason assigned for the reduction 
was that certain advantages were accorded coal operators 
through the installation of a new system of "even car supply" 
by the Railroad Administration;' the railroads agreed to pay 
fixed prices for coal and to abandon the practice of giving 
preferential car service to mines furnishing railroad fuel;^ 
this was expected to effect substantial economies in the min- 
ing and shipping of coal. 

Jobbers' Margins 

The President's order of August 23, 191 7, which fixed the 
provisional anthracite coal prices, established also jobbers' 
margins. According to this order, ^ for the buying and selling 
of bituminous coal a jobber was permitted to add to his pur- 
chase price a gross margin not in excess of 1 5 cents per ton of 
2,000 pounds ; for buying and selling of anthracite coal a jobber 
could not add to his purchase price in excess of 20 cents per 
ton of 2,240 pounds when delivery of this coal was to be 
effected at or east of Buffalo ; a gross margin not to exceed 30 
cents per ton was allowed for the delivery of anthracite coal 
west of Buffalo. A jobber's gross margin could be increased 
by 5 cents per ton of 2,240 pounds when the jobber incurred 
the expense of rescreening it at Atlantic or lake ports for 
transshipment by water. 

The President's order was supplemented by the rulings of 
the Fuel Administrator issued on October 6J These rulings 
referred to contracts which had been concluded by jobbers 

* The Iron Age, May 30, 1918, p. 1425. 

2 Commercial and Financial Chronicle, June i, 1918, p. 2292. 

^ U. S. Fuel Administration, Publication No. 3, August 23, 1917. 

*Ibid., No. 9. 



THE UNITED STATES 269 

previous to the establishment of the maximum price and 
margins." They were as follows: 

Free coal shipped from the mines subsequent to the promulgation of the Presi- 
dent's order fixing the price for such coal shall reach the dealer at not more than 
the price fixed by the President's order plus only the prescribed jobber's commis- 
sion (if the coal has been purchased through a jobber) and transportation charges. 

A jobber who had already contracted to buy coal at the time of the President's 
order fixing the price of such coal, and who was at that time already under contract 
to sell the same, may fill his contract to sell at the price named therein. 

A jobber who, at the time of the President's order fixing the price of the coal in 
question at the mine, had contracted to buy coal at or below the President's price, 
and at that time had no contract to sell such coal, shall not sell the same at a price 
higher than the purchase price plus the proper jobber's commission as determined 
by the President's regulation of August 23, 191 7. 

A jobber who, at the time of the President's order fixing the price of the coal in 
question, v/as under contract to deliver such coal at a price higher than a price 
represented by the price fixed by the President or the Fuel Administrator for such 
coal plus a proper jobber's commission as determined by the President's regula- 
tion of August 23, 1917, shall not fill such contract with coal purchased after the 
President's order became effective and not contracted for prior thereto at a price 
in excess of the President's price plus the proper jobber's commission. 

A jobber who, at the date of the President's order fixing the price of the coal in 
question, held a contract for the purchase of coal without having already sold or 
contracted to sell such coal, shall not sell such coal at more than the price fixed by 
the President or the Fuel Administrator for the sale of such coal after the date of 
such order, plus the jobber's commission as fixed by the President's regulation of 
August 23, 1917. 

According to an announcement made on November 8, 
1917, contract coal which a jobber had purchased at a price 
higher than the maximum could be sold by him at a sufficient 
advance so that his profits would be the same as if he had 
obtained .coal at the price fixed. In order to take advantage 
of this order, the jobbers had to show that the coal was 
contracted for in bona fide agreement prior to the President's 
proclamation. The coal had to be sold to the purchasers 
designated by the State Fuel Administration.' 

Retail Prices 
Retail prices of coal, according to an announcement made 
by the Fuel Administrator on September 30, 191 7, were 
established in the following manner: Coal dealers had to 

1 C. R. Van Hise: op. cit., p. 157. 



270 PRICES AND PRICE CONTROL DURING THE WAR 

ascertain their retail margins in 1915; to this they were per- 
mitted to add an amount not exceeding 30 per cent of that 
margin, including their profits at that time.^ Retail dealers 
who had not been in business before January i, 1916, were 
allowed to continue to sell at the gross margin which they had 
received during the period in which they had been in business, 
provided that this margin did not exceed that which was 
received during July, 1917.^ 

The regulation of the retail sale of coal was placed in the 
hands of local fuel committees of citizens where there were 
complaints that excessive profits were made by retailers. 
These committees, after ascertaining the retailer's cost of 
conducting business, reported to the State Fuel Administra- 
trator what they considered to be the proper maximum 
retail gross margin for the community.^ The price to the 
consumer consisted of this margin plus the cost of coal at the 
mine, the transportation charges and the jobber's com- 
mission (when sold through a jobber).^ 

Bona fide contracts enforceable by law, made before October 
I, were not affected by the order. However, only minimum 
amounts were to be delivered under such contracts as long as 
reasonable requirements of other consumers had not been met. 

Retail dealers were under an obligation to ascertain on the 
first and sixteenth days of each calendar month the average 
cost to them of coal or coke. Monthly reports were required 
by the United States Fuel Administrator and the Federal 
Trade Commission; these reports showed the cost of coal or 
coke received by the dealers, their sales prices and their gross 
margins. 

By a decision of the Fuel Administration passed during 
the latter part of February, retail dealers after April i, 1918, 
could purchase coal at the same price, whether they bought 
it directly from mines or through jobbers. It was stated that 

1 Monthly Review of the U. S. Bureau of Labor Statistics, November, 1917, p.Sg. 

2 "Maximum Gross Margins of Retail Coal Dealers," U. S. Fuel Administration, 
Publication No. 7. . ^^ , o 

3 "Fuel Facts," Published by the U. S. Fuel Admmistration, October, 1918, p. 
ID. 

* U. S. Fuel Administration, Publication No. 6. 



THE UNITED STATES 27I 

the purpose of the order was to wipe out systematized forms 
of profiteering.' To continue in business, the jobbers had to 
revert to the old practice of looking to mine operators for 
compensation. A slight increase in mine price was to provide 
for operators' added expense. 

The Fuel Administration in its handling of the coal situation 
during the first half of 191 7 committed the mistake of consid- 
ering the problem largely from one angle only, that of price. 
The sharp advance in price was attributed almost solely to 
exorbitant profits made by coal mine owners and coal dealers; 
the remedy was sought in price fixing and in the establish- 
ment of margins. Not until shipments to Europe of food and 
munitions came to a standstill, because of lack of coal at the 
seaboard terminals, and not until the whole industrial war 
program of the country seemed to be on the point of col- 
lapse, did the question of production and distribution of coal 
assume the importance it should have had from the very 
beginning. No adequate provisions were made during the 
summer and fall of 191 7 to stimulate maximum output and 
early wide distribution. Consumers were holding off in the 
expectation of a fall in price and they were encouraged in their 
attitude by the statements issued by the Fuel Administrator. 

Things went from bad to worse during that part of the year 
when reserves should have been accumulated by the users of 
coal. In the week of August 13 production reached its lowest 
point in the year. 

An unexpected climax came on January 16, 191 8, when the 
Fuel Administrator issued one of the most drastic government 
regulations brought about by the war. The order directed 
that all factories east of the Mississippi river be shut down for 
five days beginning January 18, 1918. The order involved 
over 85 per cent of the country's steam plants used for 
manufacturing. There was no advance notice of such an 
order and no opportunity to make preparation. ^ In addition 
to the shutting down of factories, a request was made that for 

1 Commercial and Financial Chronicle, February 23, 1918, p. 769. 

2 The Nation's Business, March, 1918, p. 8. 



272 PRICES AND PRICE CONTROL DURING THE WAR 

ten weeks on Monday, offices, factories and stores, except drug 
and food stores, use only such fuel as was necessary to prevent 
damage. 

The New York World, which on most occasions supported 
the government, described this order as a confession of in- 
competency, as a damning indictment of the Fuel Adminis- 
tration. It pointed out that "even Italy, which depends for 
fuel upon the scanty supply of coal doled out by Great Britain 
and the United States, has never undertaken to close down its 
industries in order to save coal. Nor has France, where the 
fuel problem has been acute from the beginning of the war."^ 

The coal trade's main criticism of the handling of the fuel 
situation was directed at the administration's unwillingness,]to 
use coal experts — men familiar with the methods of getting 
results with the least disturbance of the established procedure. 

In a memorandum dated November 12, 191 8, Mr. Garfield 
gave the following review of the conditions which prompted 
the order and of the results achieved. ^ 

Notwithstanding large production of coal, the "stocking 
up" for the winter of 191 7-1 8 was so unsatisfactory that it 
was evident in September, 191 7, that should the country have 
a severe winter and should the government speed up war 
preparation faster than originally intended, an acute shortage 
of coal was imminent. Both contingencies occurred. The 
conditions in Europe upset more than one of the carefully 
coordinated plans of the government leading to an abnormal 
demand for fuel. A winter of greater severity than the country 
had known for fifty years doubled the domestic consumption 
of coal. The railroads were. blocked for days at a time, and 
while consumers were near the end of their supplies mines 
stood idle because of lack of cars. A marked slowing up in 
the work of the most essential war industries took place. Pig 
iron production was cut in two. Mills working on ship plates 
dropped to 30 per cent capacity. Meanwhile, in the harbors 
of the country hundreds of vessels loaded with supplies for 

^ The Literary Digest, January 26, 1918, p. 6. 

* U. S. Department of Labor, Monthly Labor Review, December, 19 18, pp. 164-167 . 



THE UNITED STATES 273 

the Allies and the American soldiers were awaiting bunker 
coal and all efforts to provide a supply proved futile. To re- 
lieve the situation the order was issued. The results of it were 
immediate. Conditions improved so much and so quickly 
that a subsequent order removed the restriction after the 
establishments affected had been closed only three of the nine 
Mondays specified in the original order. Dr. Garfield stated 
that neither the severity of the remedy nor its suddenness could 
have been avoided. As, according to his own statement, the 
condition existed for several weeks previous to the issuance of 
the order, one wonders why nothing had been done to relieve 
the situation before the issue of the "drastic" and "unprece- 
dented" decree. 

Since the coal shortage in the winter of 1916-17, efforts 
have been made to further stimulate the production of coal. 
Due to these efforts the output increased from 590,098,175 
tons in 1916 to 651,402,374 tons in 1917. However, much of 
the coal shipped to the market during the latter year contained 
slate, shale and dirt. To prevent as much as possible the 
shipment of such coal, the Fuel i\dministration by an order 
effective June i, 191 8, prohibited the sale, shipment or 
distribution of coal which on account of its content of impuri- 
ties would not have been considered merchantable prior to 
January i, 19 16. In case of violation of this rule, 50 cents 
per ton could be deducted from the government price if the 
coal had been already loaded into cars or bins.^ T 

The difficulties encountered in connection with price fixing 
of bituminous coal lay in the decentralization of the industry 
as well as in the fact that normally part of the supply of bitu- 
minous coal comes from many small mines run in a very 
inefficient manner. Some of these could not be profitably 
operated after prices were first fixed; they shut down. Sub- 
sequent price increases improved the situation, but "the period 
of demoralization which followed the original price fixing left 
its impress upon the coal industry: many unskilled laborers 

^ W. Notz: "The World's Coal Situation during the War," Journal of Political 
Economy, July, 191 8, p. 681. 



274 PRICES AND PRICE CONTROL DURING THE WAR 

left the coal fields; banks in some cases hesitated to finance 
coal shipments until the clearing up of the question of margin 
and resale of coal purchased at high prices."^ 

While concentration characterizes the anthracite coal 
industry, the problem of price fixing in this industry was 
greatly complicated by the varying percentages of sizes pro- 
duced by different mines in the same region and the still more 
widely varying percentage of sizes produced by the different 
regions." In order to arrive at some definite conclusions as to 
what should be the height of bituminous and anthracite coal 
prices, the Engineers' Committee was constituted in January, 
1 91 8, for the purpose of making a general review of costs and 
of submitting to the United States Fuel Administration the 
results of careful studies of the costs of producing coal through- 
out the country. 

The committee's first work was a study of price fixing meth- 
ods applicable to coal producing conditions. It attempted to 
evolve a method which would fill as nearly as practicable the 
following requirements: 

1. Result in a price fair to the public. 

2. Prevent excessive prices or profiteering. 

3. Prevent a multiplicity of prices in any district, 

4. Encourage legitimate production. 

5. Discourage production from inefficient and unduly 

costly operations. 

6. Insure to the producer "the cost of production, including 

the expense of operation, maintenance, depreciation, 
and depletion with a just and reasonable profit," as 
required by the Lever Act. 

The system of price fixing, as recommended by the com- 
mittee, was based upon a study of the costs obtained 
from the individual sheets filed by each operator with the 
Federal Trade Commission. These figures, with the percent- 
ages of each cost in the total production of each district, 

^B. M. Anderson: "Value and Price Theory in Relation to Price Fixing and 
War Finance," American Economical Review Supplement, March, 1918, p. 252. 
2 U. S. Fuel Administration, Publication No. 29, September 20, 1918. 



THE UNITED STATES 275 

were plotted on diagrams, showing graphically the range and 
the extent of variation in each district. On these diagrams a 
"bulk line" was drawn indicating the sources of indispensable 
tonnage. This line was considered a base to which the Fuel 
Administrator personally added a margin in his judgment 
necessary for each district. 

This method was adopted by the Fuel Administrator. With 
regard to the labor situation there was a lack of coordina- 
tion between the Fuel Administration and the War Depart- 
ment. The number of laborers working in anthracite mines 
decreased from 177,000 in 1916 to 153,534 '^^ '^9^7- Mr. 
Garfield had been permitting the depletion of unreplaceable 
labor, both skilled and unskilled, without raising his voice 
against it.' Thousands of men left the coal fields also for 
more lucrative employment. In the bituminous mines the 
trouble has been largely due not to the shortage of labor but 
to the lack of locomotives and cars for the haulage of coal 
away from the mines.- This inadequacy of transportation 
facilities checked production. It never rose suflficiently to 
meet the needs of the nation at war. 

Just before the conclusion of the armistice the Fuel Admin- 
istration admitted that it was certain that the enormous 
demands for fuel could not be fully met by production.^ 

On February i, 191 9, the Fuel Administration discontinued 
all price control and much of the supervision over distribution 
of coal, coke, oil and natural gas. With the passing of control 
over fuel, most of the activities of the Fuel Administration 
ceased. The administration, however, under the Lever Act 
can not disband until peace has been declared. 

Coke 

On November 9, 191 7, maximum base prices for Beehive 
coke manufactured east of the Mississippi river were fixed as 
follows : 

^A. J. Nock: "The Alarming Coal Situation," The Nation, August 3, 1918, 
p. 116. 

2 The Literary Digest, February 21, 1918, p. 9. 
2 "Fuel Facts," p. 6. 



276 PRICES AND PRICE CONTROL DURING THE WAR 

48-hour blast furnace $6.00 per ton of 2,000 lbs., f. o. b. at the 

place of manufacture 
72-hour selected foundry I7.00 per ton of 2,000 lbs., f. o. b. at the 

place of manufacture 
Crushed, over I inch in size $7-30 per ton of 2,000 lbs., f. o. b. at the 

place of manufacture 

Subsequent orders established prices for coke from various 
plants in Alabama, Colorado, Georgia, New Mexico, Okla- 
homa, Pennsylvania, Tennessee, Virginia, Washington and 
West Virginia. These prices varied considerably in each 
State; thus, while the price of blast furnace coke made from 
coal mined in the Big Seam district of Alabama was fixed at 
$6.75, the Empire Coal Company's blast furnace coke in the 
same State was fixed at $10.50.' 

Additional compensation was allowed for deliveries or 
other services. Producers of coke at other points than at or 
adjacent to the mine could demand a fair differential to com- 
pensate them for the freight charges. ^ 

Maximum prices for by-product coke and gas coke were 
established on November 17. For by-product coke they were 
as follows: 

Run of oven $6.00 per ton of 2,000 lbs. f. o. b. cars at the plant 

Selected foundry 7.00 per ton of 2,000 lbs. f . o. b. cars at the plant 

Crushed, over i inchage 6.50 per ton of 2,000 lbs. f. o. b. cars at the plant 

The maximum price of gas coke for Industrial or metallurgical 
use was fixed to be the same as the price for the corresponding 
grade of coke produced in by-product ovens. ^ Gas coke 
sold for household purposes was to be sold at the government 
price for anthracite coal In the same locality. 

On July 8, 1918, an order was Issued which established a 
more definite control of gas coke prices. It gave base prices for 
gas coke at plants in those districts where anthracite coal was 
not obtainable and in those where it was obtainable. The 
new schedule of prices for the first districts was : 

1 . Run of retorts $5 • 50 

2. Run of retorts screened above | inches in size 6.00 

3. Run of retorts screened and sized about | inches in size 6.50 

4. Run of retorts screened and sized between J and | inches 4-50 

^ Price Fixing Bulletin No. 11, "Fuels," pp. 28-31. 
^ C. R. Van Hise: Conservation and Regulation, p. 151. 
^ U. S. Fuel Administration, Publication No. 13, p. 3. 



THE UNITED STATES 277 

In those districts where anthracite Avas obtainable the price 
of gas coke varied in accordance with its use. In case of 
sales to dealers for distribution in less than car lots or deliv- 
ered direct to consumers for household purposes the price was 
for coke screened and sized above f inches, the same as for 
stove anthracite in the same locality. A 25 cents reduction 
was accorded for size about f inches and a 75 cents reduction 
for nonscreened coke. Prices for coke sold for purposes other 
than just mentioned were the same as for gas coke in localities 
where anthracite was not obtainable. This order, which was 
superseded by one amending it, as from August i, 191 8, 
fixed also prices for breeze (to be half the price established for 
run-of-retorts coke, unscreened) and for coke made in beehive 
ovens. 

The order which became effective on August i, 191 8, 
contained among its various regulations a statement that 
commissions to selling agencies or jobbers' margins were to 
be paid by vendors and were not to be added to established 
prices. 

Charcoal 

The price of charcoal was fixed on July 9, 1918, per bushel of 
twenty pounds, f. o. b. cars at point of shipment, for lump in 
bulk, at 30 cents, for lump in bags, at 32 cents, and for screen- 
ings in bags at 20 cents.' 

Petroleum Products 

Maximum prices for petroleum products which were effec- 
tive from May 20, 191 8, to July 19, 191 8, applied only to 
the purchases by the Allied governments. The price for fuel 
oil was 5.25 cents per gallon, f. o. b. gulf ports and 7.50 
cents a gallon, f. o. b. Norfolk, Baltimore, Philadelphia and 
New York. Other prices were for standard wtiite refined 
kerosene, 7.50 and 8.25 cents respectively; for gasoline, 21 
and 23.50 cents, and for aviation naphtha, 30 and 32 cents. 

1 Price Fixing Bulletin, No. 11, p. 34. 



CHAPTER VIII 

Iron and Steel" 

The first authoritative statement regarding price fixing of 
iron and steel products was issued by the Secretary of War on 
July 12, 1917. After referring to the assurance of the steel 
men that their entire product would be available for the pur- 
pose of carrying on the war and that they were doing every- 
thing possible to stimulate an increased production and speed 
deliveries, the Secretary stated that "the price to be paid for 
the iron and steel products furnished was left to be determined 
after the inquiry by the Federal Trade Commission is com- 
pleted, with the understanding that the price, when fixed, 
would insure reasonable profits and be made with reference 
to the expanding needs of this vital and fundamental 
industry."- 

There was no upward trend in iron and steel quotations 
until nearly a year after the outbreak of the war; in fact, from 
July, 1914, to the middle of 1915, prices continued at the low 
level to which they were carried by the depression of 1914. 
Taking the relative price from July, 1913, to June, 1914, as 
equal 100, the yearly average price of pig iron fell from no 
in 1913 to 97 in 1914 and to 103 in 1915; during the same 
period the price of iron ore declined from 103 to 92 and 85, 
and the price of coke from 118 to 88 and 87.- The relative 
price of best refined iron bars was 107 in 191 3, 89 in 1914 and 
97 in 191 7; the price of bessemer steel billets 117 in 1913, 92 
in 1914 and 106 in 1915, the price of steel bars no in 1913, 
91 in 1914 and 104 in 1915.^ Since the second half of 1915, 
under the stimulus of war orders, prices began to rise at an 

1" Maximum Prices on Iron and Steel Products," American Iron and Steel 
Institute, November 15, 1918, p. 7. 

2 Price Fixing Bulletin, "Market Prices of Commodities under Control," War 
Industries Board, November, 1918, p. 3. 

^ Ibid., pp. 28, 30, 33. 

278 



THE UNITED STATES 279 

accelerating rate, reaching their highest point in July, 191 7. 
Of the materials used in the production of pig iron, coke has 
had the most extreme price fluctuations. Its price advanced 
from $1.75 per ton in July, 1915, to $12.25 in July, 1917, or 
494 per cent above its prewar base. 

The most marked rise in the price of Iron ore occurred in 
December, 1916; up to that time the price of this material 
fluctuated within a comparatively narrow range ; it rose from 
$4.20 in November, 19 16, to $5.70 in December of the same 
year, a rise of 53 per cent above its prewar rate; the price 
remained at this level through the subsequent months and 
was continued when iron ore came under control. 

Prices of iron ore and of coke are significant because of their 
bearing on the price of pig Iron. About two tons of ore and 
one ton of coke are required for the production of a ton of 
pig iron; thus ordinarily the cost of ore is a larger factor of 
expense than the cost of coke. With the rapid rise In the 
price of coke during 1916 and 191 7, the cost of coke began to 
bear more heavily on the price of pig Iron. However, this 
was not as determining a factor as may have been expected, 
as probably only small quantities of coke were purchased at 
the high market prices.' The price of pig iroa advanced from 
$13.00 In July, 1914, to its record price of $52.50 for the same 
month in 1917. 

The prices of finished rolled steel products rose at a more 
rapid rate and covered a wider range than either the prices 
of pig iron or of iron products. This independent advance 
may be attributed to the limited capacity for making steel 
as well as for making certain types of finished products. 
Steel plates, in response to a heavy war demand, led the 
advance; their relative price rose from 97 in July, 191 5, to 
357 in April, 1917, and to 714 in July, 1917; steel billets, 
sheet bars, structural shapes, steel plates and skelp rose also 
relatively higher in 191 7 than did pig iron. The rise of these 
products was as follows, like in all previous cases, the average 

^ Price Fixing Bulletin. "Market Prices of Commodities under Control," 
War Industries Board, November, 1918, p. i. 

19 



280 PRICES AND PRICE CONTROL DURING THE WAR 

of market prices from July i, 1913, to June 30, 1914, being 
taken as 100: 

July, 1915 April, 1917 July, 1917 

Steel billets, open hearth 103 344 436 

Sheet bars, open hearth loi 331 464 

Structural shapes 98 260 424 

Steel plates, rank 97 357 714 

Skelp, steel, grooved 94 278 476 

While the prices were soaring, two investigations of the 
steel industry were being conducted in order to determine the 
iron and steel making costs and by this means to arrive at a 
basis for the establishment of a fair price to be paid by the 
government to the manufacturers. One investigation was 
carried on by the Federal Trade Commission, the other by 
the Senate Committee on Interstate Commerce, in conjunc- 
tion with the latter's inquiry into coal, oil, copper and other 
costs. 

Not much good was expected from the work of these agen- 
cies by the iron and steel interests, one of whose apparent 
spokesmen. The Iron Age, charged that the investigators were 
not equipped to make the investigation and were not com- 
petent to say what amount should be added for profit, in view 
of all interests to be conserved in such critical time as the one 
through which the country was passing.^ This periodical 
hinted that governmental price regulation might lead to the 
unsettling of business at the very time when business should 
be kept prosperous, and it suggested as an alternative to price 
control a regulation of industry which would facilitate the, 
flow of material, thus permitting the fulfilment of existing 
obligations. According to The Iron Age, confusion arose 
from inability to carry out contracts entered into between 
producers and consumers; this situation could not be remedied 
by price fixing which would naturally apply to future business 
transactions. While the periodical admitted that some form 
of regulation was necessary, it favored action by producers 
under governmental sanction to direct action by government 
authorities, the first having fewer possibilities of harm.- It 

1 The Iron Age, June 28, 1917, p. 1563. 
"^ Ibid., July 12, 191 7, p. 88. 



THE UNITED STATES 28 1 

advocated "that the government provide sufficient transpor- 
tation facilities, that it extend aid to the erection of additional 
blast furnaces and that it adopt a more vigorous policy in 
dealing with labor." 

Although it had been advanced that the increase in iron 
and steel prices was largely due to the increase in the cost of 
production, there was in reality very little relation between 
the two. The United States Government, private consumers 
and representatives of the Allies were bidding against each 
other and driving prices upwards irrespective of any costs. 
Some of the larger manufacturers tried to stabilize prices by 
withdrawing from the market except for contracts of great 
importance, but this resulted merely in the centering of the 
bids on the minor producers, thus occasioning a still sharper 
price advance. 

On September 24, 191 7, the President approved the first 
maximum prices agreed upon by the War Industries Board 
and the representatives of the iron ore, pig iron and steel 
interests. The prices became effective immediately, subject 
to revision on January i, 191 8. The prices agreed upon were 
as follows :i 

Commodity Basis Prices Agreed Upon 

Iron ore Lower Lake ports 5 05 per G. T. 

Coke Connellsville 6 .00 per N. T. 

Pig iron 33 . 00 per G. T. 

Steel bars Pittsburgh-Chicago 2 .90 per 100 lbs. 

Shapes Pittsburgh-Chicago 3 00 per 100 lbs. 

Plates Pittsburgh-Chicago 3 25 per 100 lbs. 

It was stipulated that there should be no reduction in the 
rate of wages and that the prices should apply to the pur- 
chases not only by the government, but also by the Allies and 
by the general public. The steel men pledged themselves to 
exert every effort necessary to keep up the production to the 
maximum of the past as long as the war should last. 

The War Industries Board took upon itself the placing of 
orders and the supervision "of the output of the steel mills 
in such manner as to facilitate and expedite the requirements 

^ Official Bulletin, September 25, 1917. 



282 PRICES AND PRICE CONTROL DURING THE WAR 

of the government and its Allies for war purposes and to 
supply the needs of the public according to their public im- 
portance and in the best interest of all, as far as practicable."^ 

With the establishment of these basic prices the iron and 
steel industry was saved from the intolerable situation into 
which it had drifted. Whether the steel manufacturers were 
merely responsibile for allowing buyers to bid up the market, 
without taking some definite measures to prevent the move- 
ments, or whether they themselves took an active part in 
advancing the prices, is a debatable question.- The mistake 
was made, and the result of this mistake was a market at the 
beginning of July, 191 7, which was vastly different from that 
which the industry had always had hitherto. It was a market 
for early deliveries. For late deliveries, even for the early 
part of 1 91 8, the mills were not quoting and the buyers were 
not inquiring.^ Only those whose necessities were compelling 
them to pay any price were buying. The industry was seem- 
ingly unable to let down prices easily and smoothly to a 
regular trading basis and the things were drifting along with 
no alternative in sight. 

There was some discussion as to whether price regulation 
should be made to apply to existing contracts. A large 
amount of material had been contracted for at high prices for 
future delivery. It was pointed out by the Federal Trade 
Commission^ that unless contracts for high priced basic 
materials were suspended, the purpose of price regulation 
would be largely defeated and that a great deal of inequity 
would result because of the differentials in price between the 
government price on the one hand and the contract price on 
the other. In a scarce market the producers might also be 
disposed to fill only high priced contracts, leaving no material 
for the open market at the fixed prices, or they might in mak- 
ing new sales at the prices just fixed find difficulty in per- 

1 " Maximum Prices on Ironand Steel Products," ^mmcan /row and Steel Insti- 
tute, p. 8. 

2 The New York Evening Post, December 31, 1917, p. 21. 

^ Ibid., p. 21. 

^ Commissioner Davies' testimony before the Senate Committee on Interstate 
Commerce. 



THE UNITED STATES 283 

suading a competitor that he should continue to pay $io or 
$20 higher as stipulated by contract. The steel producers, 
however, were opposed to contract abrogation, though they 
did advocate voluntary revision on the part of the sellers in 
cases when peculiar hardship was worked by the contracts.^ 
It was also maintained that consumers would gain nothing 
and possibly lose out by canceling contracts; the products had 
already been sold on the basis of prices made in these con- 
tracts ; so that the lower contract prices on the one end would 
mean a readjustment of selling prices at the other. It was 
finally agreed that the price regulation should not affect the 
bona fide contracts made either with individuals or with the 
government. 

The agreement reduced the prevailing prices, according to 
the Committee on Public Information, in the case of- 

Coke, from $16.00 to $6.00 or 62.5 per cent 
Pig iron from $58.00 to $33.00 or 43.1 per cent 
Steel bars from $5.50 to $2.90 or 47.3 per cent 
Shapes from $6.00 to $3.00 or 50 per cent 
Plates from $11.00 to $3.25 or 70.5 per cent 

Fixed prices, while presenting a considerable reduction over 
current quotations, were on an average 83 per cent higher 
than prices which prevailed at the beginning of 1916, when 
Judge Gary advised caution and expressed the fear that there 
was "inflation,"^ The Federal Trade Commission's opinion 
of the iron and steel prices was that while they prevented the 
steel market from running away, they strengthened the posi- 
tion of the low cost producers and enriched them by profits 
which were without precedent.* 

In finding cost in the steel industry, the commission divided 
the steel makers into four groups: (i) the fully integrated 
mills, (2) the mills which start with the manufacture of pig 
iron, (3) the mills that start with steel furnaces and (4) the 
mills that make rolled products from purchased semi-finished 
steel. The United States Steel Corporation belongs to class 

1 The Iron Age, October ir, 19 17. 

2 Commercial and Financial Chronicle, June 29, 1918, p. 2693. 
^ The New York Evening Post, December 31, 1918, p. 17. 

* "Profiteering," 65th Cong. 2d Sess. Sen. Doc. No. 248, p. 6. 



284 PRICES AND PRICE CONTROL DURING THE WAR 

one. Its profits expressed in terms of the total amount invested 
in the business showed net earnings as follows: 

1912... 4.7 per cent 1915 5.2 per cent 

1913 5.7 percent 1916.... 15.6 percent 

1914. 2.8 percent 1917 24.9 percent 

The net income of the Steel Corporation, before deducting 

federal income and excess profits tax in 19 17, was: 

1912 $77,075,217 1915 $97,967,962 

1913 105,320,691 1916 294,026,564 

1914 46,520,407 1917 478,204,343 

The federal income and excess profits taxes of the Steel Cor- 
poration for 191 7 were $233,465,435, which left for net income 
$244,738,908.1 

Mills in classes 2, 3 and 4 also made heavy profits in 1917. 
The commission gives figures for ten mills in class 3, which 
showed the profits in 1917, fluctuating from 30.24 per cent on 
investment for Eastern Steel Co., to 159.01 for West Penn 
Steel Co. and 319.67 per cent for Nayle Steel Co. 

The set prices were no lower, on the whole, than the invoice 
prices which obtained upon shipment made by the large com- 
panies during the second quarter of the year, and upon which 
they made their record earnings.- ^Price fixing scaled down 
the quoted market and also the prices realized by the smaller 
steel producers, those who do not customarily book orders far 
ahead. 

Large producers, like Judge Gary, E. A. S. Clarke, president 
of the Lackawanna Steel Co., W. S. Horner, president of the 
National Association of Sheet and Tin Plate Manufacturers, 
and others, whose opinions were canvassed by The Iron Age, 
expressed themselves as pleased with the set prices,^ with a 
few exceptions, characterizing them as fair and reasonable. 
On the other hand there was a great deal of public dissatisfac- 
tion; it was advanced that the elaborate investigations of the 
Federal Trade Commission concerning costs had gone for 
naught and that the agreed prices should have been much 

1 "Profiteering," 65th Cong. 2d Sess. Sen. Doc. No. 248, p. 6. 

2 The New York Evening Post, December 31, 1917, p. 22. 
2 The Iron Age, September 25, 1917, p. 757. 



THE UNITED STATES 285 

lower. 1 The comparatively high prices were justified on the 
ground that they had to be fixed at a level which w^ould keep 
in full operation every mill and blast furnace which contrib- 
uted appreciably to the country's supply. They were based 
on the cost of production to the high cost producers. 

The following table gives the prices which prevailed during 
the four years previous to the war as compared with govern- 
ment prices: 

IRON AND STEEL PRICES IN DOLLARS PER GROSS TON 2 

Aver. Govt. 

1911 1912 1913 1914 for 4 Price 

Yrs. (Sept. 24) 
Mesaba ore, non-Bessemer .. . $3.50 S2.85 $3.40 $2.85 $3.15 $505 
No. 2 foundry pig iron, Phila- 
delphia . 15.21 16.03 16.54 14-73 1563 33 + 

No. 2 foundry pig iron at Chi- 
cago furnace ... _. _.. 14.83 15.32 15.85 13.60 14.90 33 

No. 2 foundry pig iron, Cin- 
cinnati 13 67 14.93 14.90 13.41 14.23 .... 

Bessemer pig iron, Pittsburgh . 15.71 15.94 17.12 14.89 15.92 36 + 

Basic pig iron, valley furnace. 13.07 13.92 14.71 12.87 13.64 33 

On October ii maximum prices were fixed for blooms, bil- 
lets, slabs, sheet bars, wire rods, shell bars and skelp, and on 
November 5 for sheets, pipe, cold rolled steel, scrap, wire and 
tin plate. All prices were subject to revision January i, 191 8. 
On the recommendation of the War Industries Board they 
were continued unchanged until March 31, 191 8. The fol- 
lowing prices were agreed upon.^ 

Basis Price 
(Per G. T.) 

Blooms and billets, 4x4 in. and larger. . Pittsburgh-Youngstown $47.50 

Billets, under 4 x 4 in Pittsburgh-Youngstown 51 .00 

Slabs Pittsburgh-Youngstown 50 .00 

Sheet bars Pittsburgh-Youngstown 51 00 

Wire rods Pittsburgh 57 . 00 

(Per 100 lbs.) 

Shell bars, 3 to 5 in Pittsburgh 3.25 

Over 5 to 8 in Pittsburgh 3 ■ 50 

Over 8 to 10 in Pittsburgh 4 .00 

Over 10 in Pittsburgh 4 . 00 

Skelp, grooved Pittsburgh 2 .90 

Skelp, universal Pittsburgh 3-15 

Skelp, sheared Pittsburgh 3.25 

1 Berglund: "Price Fixing in Iron and Steel Industry," Quarterly Journal of 
Economics, p. 612. 

^ The Iron Age, October 4, 19 17, p. 833. 

^"Maximum Prices on Iron and Steel Products," American Iron and Steel 
Institute, November 15, 1918, pp. 8-io. 



286 PRICES AND PRICE CONTROL DURING THE WAR 

SHEETS 

(Per loolbs.') 

No. 28 black sheets, f. o. b. Pittsburgh $5 -OO 

No. 10 blue annealed sheets, f. o. b. Pittsburgh 4.25 

No. 28 galvanized sheets, f. o. b. Pittsburgh 6 .25 

The above prices to apply to both Bessemer and open-hearth grades. 

PIPE 
On f in. to 3 in. black steel pipe — discount 52 and 5 and 2| per cent, f. o. b. Pitts- 
burgh. 

COLD ROLLED STEEL 

17 per cent discount from March 15, 1915, list f. o. b. Pittsburgh. 

SCRAP 

F. O. B. 

Consuming Point 

(Per G. T.) 

No. I heavy melting ,. feo.oo 

Cast iron borings and machine shop turnings 20. 00 

No. I railroad wrought 35 -oo 

WIRE 
Plain wire, f. o. b. Pittsburgh $3 .25 per 100 lbs. 

TIN PLATE 
Coke base, Bessemer and open hearth, f. o. b. Pittsburgh. . .$7.75 per 100 lb. box 

Schedules of differentials to be applied to steel products in 
more advanced stages of manufacture were gradually evolved 
by the General Committee on Steel and Steel Products of the 
American Iron and Steel Institute. Recommendations for 
the adoption of such schedules were made on November 13, 
November 20 and December 22, 1917, and January 7, 1918. 
It was attempted to cover in these schedules all currently 
quoted standard articles. Modifications in differentials were 
made from time to time by the chairman of the Committee on 
Steel and Steel Products. 

In the latter part of March, 1918, the President approved 
the recommendation of the Price Fixing Committee of the War 
Industries Board that the maximum prices heretofore fixed 
upon iron ore, coke, steel and steel products should be con- 
tinued until July i, 1918, with the exception of basic pig iron, 
which was reduced from $33 to $32 a gross ton, and of scrap 
steel, which was changed from $30 to $29 per gross ton. In 
connection with this order, it has been requested that new 
contracts calling for delivery on or after July i should not 
specify a price unless coupled with a clause making the price 



THE UNITED STATES 287 

subject to revision by any authorized government agency. 
Tiiis clause was inserted so that all deliveries after July i 
should not exceed the maximum prices then in force, whatever 
the date of the conclusion of the contract may have been.^ 

On June 21, 191 8, the Committee on Steel and Steel Prod- 
ucts of the American Iron and Steel Institute met in confer- 
ence with the Price Fixing Committee of the War Industries 
Board. The conference was called at the instance of Chair- 
man Baruch and the Director of Steel Supply Replogle for 
the purpose of obtaining views of steel men as to whether 
changes in prices were desired and, if so, what should be the 
character and the extent of the changes. ^ The principal 
topics considered at this conference were (i) the added drain- 
age on the fund of producers by 24 per cent advance on class 
commodity rates, which was to take effect in the latter part 
of June, and (2) recent wage advances.^ 

A schedule of iron and steel prices to remain in effect until 
September 30 was agreed upon. One of the main differences 
between the old and the new schedule was an increase in the 
iron ore prices from $5.05 per gross ton for lower lake ports to 
$5-50> which change became effective July i. This advance 
of 45 cents per ton was made to cover the increase in freight 
rates from mines to upper docks (33.6 cents) and such charges 
as spotting cars, switching, etc., which were not levied when 
railroads were operated by private individuals. The new 
agreement provided that in the event of any increase or 
decrease in either rail or lake rates the base prices for iron ore 
were to be increased or decreased accordingly on all deliveries 
made during the continuance of such increased or decreased 
freight rates. 

Another exception to the schedule previously in force was 
the discontinuance of Chicago as a basing point, for steel bars, 
shapes and plates.^ This was due partly to the fact that 
Chicago mills were loaded to their full capacity. 

1 Official Bulletin, March 27, 1918. 

2 Iron Age, June 20, 1918, p. 1612. 

^ Commercial and Financial Chronicle, June 22, 1918, p. 2615. 
*" Maximum Prices on Iron and Steel Products," American Iron and Steel 
Institute, November 15, 1918, p. 14. 



288 PRICES AND PRICE CONTROL DURING THE WAR 

Producers, especially merchant furnace operators, who buy 
a large part of their ore in the open market, were dissatisfied 
because the price of pig iron was not raised. Some of them 
claimed that the costs of making pig iron have mounted so 
high as to leave them no profit.^ 

The conference spent some time in discussing Willard's plan, 
under which it was proposed that the government should take 
over the output of various producers at cost plus reasonable 
profit, pool the entire production and, after commandeering 
the government's supply, sell the remainder to private parties 
at a flat rate. The argument advanced in favor of this plan 
was that it would have enabled the government to give small 
producers a fair profit, thus stimulating maximum production 
without adopting at the same time a price that would yield 
exorbitant gains for big corporations. No action was taken 
on this plan. 

No advance had been granted in the price of finished steel. 
The Iron Age, In discussing the results of the conference, 
charged that, though approaching the conference with what 
was said to be open mind, the War Industries Board had 
practically determined in advance that there was to be no 
Increase on steel.- Mr. Baruch contended that in all price 
fixing arrangements, the War Industries Board was in a posi- 
tion of trustee to the public, that since the government was 
not the only user of steel, the board had no right to approve 
unnecessarily high prices, counting on drastic excess profits 
taxes to reimburse the government for its purchases. 

On July 3 there was held in Washington the first meeting of 
representative manufacturers with a special committee ap- 
pointed by the War Industries Board to consider prices to be 
fixed for steel rails, wire rope and high speed tool steel. The 
manufacturers emphasized at this meeting increased labor 
and material costs and recent freight advance. Sharp dis- 
agreements developed between them and the governmental 
price fixing committee. Thus while a price of $57 for open 

1 Iron Age, June 27, 1918, p. 1688. 
^Ibid., p. 1687. 



THE UNITED STATES 289 

hearth rails was asked by large producers and $60 by other 
interests, the government proposed a figure much lower than 
either of these two. In the case of high speed tool steel the 
steel makers declared that they could not accept the cost 
figures of the Federal Trade Commission.^ 

1 Iron Age, July 11, 1918, pp. 81, 100. 



CHAPTER IX 
Nonferrous Metals 

Aluminum 

On March 5, 191 8, the maximum price of aluminum was 
fixed by agreement between the producers and the War Indus- 
tries Board at 32 cents per pound, f. o. b. United States pro- 
ducing plant, for 50 tons and over, of ingot of 98 to 99 per 
cent.' The prewar price of aluminum was 19.71 cents per 
pound at New York. The price dropped to 17.59 cents in 
July, 1 9 14, and it continued below the prewar level throughout 
1914 and during the first part of 1915.- War demands and 
interference with imports led to a steady rise in the price after 
May, 1915, a maximum of 64.8 cents per pound having been 
reached in November, 191 6; this represented an increase of 
222 per cent over the prewar level. Since that date the price 
of aluminum has been in the main, declining. The price of 
32 cents fixed in March, 191 8, was increased to 33 cents in 
June. The increase was made after investigations into the 
cost of production by the Price Fixing Committee of the War 
Industries Board in conjunction with the Federal Trade Com- 
mission. The new maximum base price became effective 
June I, 1918, to remain in force until September i, 1918. 
Differentials for quantity and grade as well as differentials 
for alloys were left unchanged, while those for sheet, rod and 
wire were increased by approximately 12^ per cent. 

The producers of aluminum agreed first, not to reduce the 
wages; second, to sell aluminum to the United States Govern- 
ment, to the Allied governments and to the public in the 
United States at the same price; third, to take the necessary 
measures, under the direction of the War Industries Board, 

^ Price Fixing Bulletin, No. i, August, 1918, "Price Regulations by Govern- 
ment Agencies." 

^ Ibid., "Market Prices of Commodities under Control." 

290 



THE UNITED STATES 29I 

for the distribution of aluminum to prevent it from falling 
into the hands of speculators, and fourth, to keep up the pro- 
duction of aluminum so as to insure an adequate supply for 
the duration of the war. Similar agreements were concluded 
with producers of copper and other nonferrous metals. 

Copper 

The average price of copper in the New York market for 
the year just preceding the war was 15 cents per pound. Due 
to business depression in the early part of 19 14 and to 
shipping difficulties after the declaration of hostilities, the 
price dropped to 11.25 cents per pound in November, 1914. 
Under the stimulus of enormous war orders prices soon 
recovered and began advancing. The upward movement 
received three temporary setbacks, one in the latter part of 
1915, during the negotiation in this country of the Anglo- 
French loan, and two others in the middle and towards the 
end of 1916, due largely to peace rumors. In March, 1917, 
a price of 36.25 cents per pound was reached, a rise of 142 per 
cent above the prewar rate.' The advance was checked 
through somewhat increased production, submarine warfare 
and anticipation of government regulation. 

By the middle of March it was certain that the United 
States was going to declare war on Germany, and preparations 
were started. On March 23, Mr. Baruch, chairman of the 
Committee on Raw Materials, Minerals and Metals of the 
Council of National Defense, announced that the copper 
producers agreed to furnish the government with 45,000,000 
pounds of copper at i6f cents a pound, for delivery extending 
over twelve months from April first. This united action of 
the copper producers (only one of the large companies having 
refused to accept a share in this sale) was intended as a patri- 
otic demonstration and the price was not justified on any eco- 
nomic principle, since too large a proportion of the nation's 
output could not be produced for this sum.^ 

1 Price Fixing Bulletin, No. i, August, 1918. 

2 L. K. Morse, "The Price Fixing of Copper," The Quarterly Journal of Economics, 
November, 1918, p. 88. 



292 PRICES AND PRICE CONTROL DURING THE WAR 

The price of i6f cents was the average of the Anaconda sales 
for the previous ten years, but it in no way reflected the cost 
of production of copper at the beginning of 1917. The first 
consequence of the price was public criticism that the copper 
producers had been making exorbitant profits. It was argued 
that since the producers agreed to supply the government at 
i6f cents, they should be compelled to sell at the same price 
to the Allies and also to domestic consumers. ^ The buyers 
decided to abstain from purchasing. The price of copper 
began to decline, reaching by the end of April 27 cents. 

Negotiations between the government officials and the pro- 
ducers were progressing slowly. In April the ^General Muni- 
tions Board of the Council of National Defense was appointed, 
which arranged in June for the purchase of 60,000,000 pounds 
of copper at 25 cents, but this transaction was not approved 
by either the Secretary of War or the Secretary of the Navy. 
They wanted the price of copper for government requirements 
to be based on the average cost of production, allowing a fair 
profit to the producers, both costs and profits to be deter- 
mined by the Federal Trade Commission. On June 30, 191 7, 
the General Munitions Board was succeeded by the War In- 
dustries Board, whose function it was to control the produc- 
tion and distribution of all commodities essential to the con- 
duct of war. One of the duties of the War Industries Board 
was to fix prices. On March 4, 1918, this power was delegated 
to a Price Fixing Committee. The board waited for the 
report of the Federal Trade Commission, which was examining 
the producers' books, in order to determine the cost of produc- 
tion. In the meantime uncertainty prevailed. The pro- 
ducers refused Secretary Daniel's offer of i8f cents and a 
subsequent offer of 22^ cents. They were supplying all 
government requirements without billing for them. Early 
in September, the War Industries Board, in behalf of the 
Allies entered into a contract for about 77,000,000 pounds of 
copper at 25 cents. The market price of copper was at that 
time about 26 cents. On September 21 the War Industries 

1 The New York Evening Post, December 31, 1917, p. I5- 



THE UNITED STATES 293 

Board announced that by agreement with the producers the 
price of copper for the next four months had been fixed at 
23^ cents per pound, f. o. b. New York, this price to apply to 
everybody, and any violation of the agreement to be followed 
by governmental seizure. 

This "agreement" ignored contractual arrangements and 
all the other factors in the elaborate machinery of the market. 
It became necessary to immediately create an agency for the 
control of distribution of copper. Such an agency was or- 
ganized by the producers under the name of the Copper 
Producers' Committee. This committee was sanctioned by 
the War Industries Board, which entrusted to it the manage- 
ment of the business. 

In January, 1918, conferences with producers resulted in the 
continuance of the agreed price until June i, 1918. In the 
latter part of May there was a further extension to August 15, 
to which the producers did not agree. ^ They contended that 
increased cost of production made a higher price necessary. 
On July 2, at a meeting held between them and the Price 
Fixing Committee, the price was advanced to 26 cents, effec- 
tive immediately, to remain in force until November i. 

Due to far-reaching concentration of the agencies of produc- 
tion and distribution of copper, the price fixing problems in 
this industry were essentially different from those of most 
other important industries brought under control. There 
were in 191 6 in the United States 348 mines producing copper.^ 
Of this number the output of 31 mines was more than 85 per 
cent of the total, or, 1,711,395,262 pounds, while less than 
295,000,000 pounds were obtained from the remainder. 
Smelting and refining show still greater concentration; as to 
the distribution of copper, four selling agencies handled in 1916 
almost 80 per cent of all the refined copper sold in this coun- 
try for domestic and foreign consumption.^ The fixing of the 
price of copper has been simplified also by the fact that the 

1 L. K. Morse: "The Price Fixing of Copper," The Quarterly Journal of Econom- 
ics, November, 1918, p. 94. 

2 Ibid., p. 76. 

3 Ibid., p. 78. 



294 PRICES AND PRICE CONTROL DURING THE WAR 

quality of refined copper is practically the same the country 
over. The only price fixed in the copper industry was that 
for refined produce, f. o. b. New York, leaving uncontrolled 
the prices for all stages of production and distribution. 

Mercury 

The prewar price of mercury, jobbing lots, at New York, 
was 55 cents per pound. An irregular advance which had 
begun in the summer of 1914 brought the price up to $1.85 in 
January, 1916; it rose then abruptly to $4.00, at which level 
it stayed through February and March, 191 6. This extraor- 
dinary increase of 627 per cent over the price prevailing before 
the war was due to large war demands and also to the fear 
that London would cut down Spanish exports to this country. 
However, enough quicksilver was shipped to the United 
States to break the market. A sharp decline brought the 
price down to $2.55 in April and $1.75 in May; the decline 
continued to the end of the year, the price reaching a level of 
$1.05 per pound in December, 1916. Growing demand for 
quicksilver for export led to a rise in the early part of 191 7; 
the average price during the last three quarters of that year, 
as well as during the first half of 1918, was about $1.71 cents 
per pound. ^ 

The price on mercury for government purchases only was 
set on April 18, 1918, at $105 per flask of 75 pounds, for 
deliveries at San Francisco for the output of mines in Cali- 
fornia, Oregon and Nevada. Texas producers were to be paid 
the same price for deliveries at Marathon, Texas; 75 cents 
additional per flask was allowed for deliveries at New York. 

Nickel 

The prewar price of nickel ingot at New York was 42.5 cents 
per pound. This price continued through 1914 and until 
August, 1915, when the rate rose to 47.5 cents per pound. A 
second rise, this time to 50 cents per pound, occurred in March, 

1 Price Fixing Bulletin, No. i, August, 1918, "Market Prices of Commodities 
under Control." 



THE UNITED STATES 295 

191 7. Nickel continued to be sold at this latter price until it 
was reduced by government regulations in April, 1918.' 
The comparative steadiness of the price of nickel has been due 
to the fact that nickel is not dealt with as are other metals in 
an open market, but is sold on long term contracts. On 
April 2, 191 8, the International Nickel Company agreed with 
the War Industries Board to supply the government require- 
ments for nickel at the following rates: electrolytic, 40 cents 
per pound, shot, 38 cents and ingot, 35 cents. ^ The Allies 
and the United States public were not considered in the 
agreement. 

Zinc 

The prewar price of zinc, pig (spelter) Western, for early 
delivery at the New York market was 5.35 cents per pound. 
The price did not begin to rise until 191 5, reaching a maximum 
of 22.5 cents per pound in June of that year, an increase of 
321 per cent above the prewar level. ^ This advance was due 
to foreign buying and to a shortage of zinc early in 1915. 
The consumers soon found that they had overbought and the 
price receded to 15 cents in November. Then a recovery 
started. Large domestic buying and a temporary shortage 
in New York raised the price to 21 cents in March, 191 6. 
In April it began to drop again. The price fell to about 9 
cents in September, 1916, at which level with comparatively 
slight fluctuations it remained through the war. In April, 
19 1 7, a Zinc Committee was formed; it held some conferences 
with Mr. Baruch regarding government supply and fixing of 
price, but the situation in the zinc industry was such that 
there was no reason for governmental regulation. Purchases 
of common spelter were being made as heretofore on competi- 
tive bids and the results were satisfactory.* A maximum 
price for high grade zinc was fixed by agreement between the 
zinc producers and the War Industries Board on February 13, 

^ Price Fixing Bulletin, No. i, August, 1918, "Market Prices of Commodities 
under Control." 

^ Ibid., "Price Regulations by Government Agencies." 

3 Ibid. 

* The New York Evening Post, December 31, 19 17, p. 15. 

20 



296 PRICES AND PRICE CONTROL DURING THE WAR 

1 91 8; at the same time prices were also fixed for plate and 
sheet. The prices were: 

Grade A (f. o. b. East St. Louis) 12 cents per pound 

Plate (f. o. b. East St. Louis) 14 cents per pound 

Sheet (f. o. b. East St. Louis) 15 cents per pound 

The fixed price of 12 cents became the market price, but upon 
a liberalization of the specifications new competition devel- 
oped, that of high grade zinc refined by redistribution;^ the 
price fell below 12 cents and never reached that figure again. 
Of the nonferrous metals, lead, tin and antimony have not 
come under price control. 

Platinum Metals 

The first statement regarding platinum metals was Issued 
by the Council of National Defense on February 23, 1918. 
The goyernment took over the control of production, refining, 
distribution and use of crude and refined platinum for the 
period of the war. The control was entrusted to the Chemical 
Division of the War Industries Board, which Immediately 
upon taking over this work sent out to the Industry requests 
for Inventories of the existing stock of crude and refined 
platinum and platinum iridium alloys. The government 
declared that It had no Intention of taking over and handling 
directly the stock of platinum, but that It was In favor of 
permitting shipment by the producers and dealers subject to 
certain conditions.^ 

On May i, a requisitioning order was Issued through the 
Platinum Section of the War Industries Board, commandeer- 
ing parts of the supply of platinum, iridium and palladium. 
The prices which the government agreed to pay for these 
metals up to June 30, 1918, were: 

Platinum $105 per Troy ounce 

Iridium 175 per Troy ounce 

Palladium 135 per Troy ounce 

A number of other requisitioning orders were promulgated 
after May i. The orders differed from one another In the 

^ The New York Evening Post, December 31, 1918, p. 18. 

2 Price Fixing Bulletin, No. 7, October, 1918, War Industries Board. 



THE UNITED STATES 297 

extent of their application. The first order applied to only a 
few of the holders of the metal, while the later orders embraced 
the holdings of a larger number of individuals. The requisi- 
tioning order of June 21 covered all platinum, iridium or pal- 
ladium in the control of or produced by certain firms, except- 
ing when such metals were contained in articles of jewelry on 
which the value of the labor exceeded 20 per cent of the value 
of the metal. The order became effective on June 30, 1918, 
to continue until December 31, 1918. It did not change the 
prices established on May i. 

On July 12, 191 8, a request was sent out to dealers to sub- 
mit inventories covering stocks in their possession on the date 
of the receipt of the requisition of June 21 ; subsequent inven- 
tories were to be provided on the second day of each month 
up to and including January, 1919; the inventories covered 
stock acquired during the preceding month. ^ 

^ Price Fixing Bulletin, No. 7, October, 1918, War Industries Board. 



CHAPTER X 
Fibers and Textiles 

Cotton 

Upland middling cotton was selling around 13 cents a 
pound at the outbreak of the European war J Due to a very 
large crop and to a temporary discontinuance of exports the 
price dropped to 7.6 cents in November, 19 14. The cotton 
crop (without llnters) was 16,134,930 bales in 1914 as com- 
pared with 14,156,486 bales In 1913 and 13,703,421 bales in 
1 91 2. The total world production of cotton In 1914 was 
24,764,000 and the world consumption, 17,046,000 bales. ^ 
The output In 1915 was for the United States 11,191,820 bales 
(a decline of about 5,000,000 bales from the previous year) 
and for the world 18,559,000 bales; the consumption of cotton 
Increased In 191 5 to 19,761,000 bales, an Increase of 2,715,000 
bales. Cotton In 191 5 recovered sufficiently to bring the 
price In this country up to about 10 cents a pound, at which 
level it stood until October, 191 5, when It rose to 12.5 cents. 
The fluctuations In the price during the latter part of 191 5 and 
the first half of 1916 were insignificant. The small crop of 
1915 was repeated in 1916, the output for the United States 
having amounted to 11,449,930 bales and for the world 18,- 
365,000 bales. World consumption rose at the same time 
from 19,761,000 In 1915 to 21,011,000 In 1916. The price of 
cotton began to climb rapidly upwards, reaching by Novem- 
ber, 1916, 20 cents a pound. During the early months of 1917 
cotton was selling at 17.5 cents a pound, but It went up to 20^ 
cents Immediately upon our entry into the war. The produc- 
tion In 1917 was again only 11,302,000 bales for the United 
States and 17,410,000 bales for the world, with a consumption 

1 War Industries Board, Bulletin of Monthly Prices during the War, November, 
1918, p. 66. 

2 The New York Evening Post, December 31, 1918, p. 17. 

298 



THE UNITED STATES 299 

equaling 20,180,000 bales. Most of the reserves of cotton 
from previous years have been absorbed and cotton went up 
to 26.12 cents in July, 191 7, and to 30.6 cents in December, 
1917, the highest selling price since 1869. In view of the 
government's enormous requirements for cotton, it was 
thought that it would fix the price of this essential commodity 
as it did in the case of iron and steel, copper and coal. After 
our entry into the war, however, neither raw cotton nor its 
manufactures were included in the list of necessities in the 
government's price fixing and licensing regulations and no 
restrictions were placed upon trading in either spot cotton or 
in futures on the cotton exchanges. 

Cotton which in 19 14 was the object of a government proc- 
lamation to the people of the country urging every citizen 
who could do so to buy a bale of it at 10 cents per pound was 
quoted at 32.36 cents a pound in January, 1916. On Septem- 
ber 3 cotton sold on the New York market as high as 38^ 
cents per pound. This price was reached the day after the 
worst crop condition report on record had been issued by the 
Agricultural Bureau. The forecast, notwithstanding in- 
creased acreage under cotton, which rose from 34,925,000 in 
1917 to 37,073,000 in 1918, was for another comparatively 
short crop of some 11,000,000 bales. A wave of speculative 
buying swept over the New Orleans and New York cotton 
exchanges. The War Industries Board intervened and placed 
a maximum price of 30 cents a pound on its future war orders. 
This, together with restrictions placed upon exports to neu- 
trals and with the centralization of further buying by the 
Allies, checked the price advance. Cotton fell to 32^^ cents in 
October, 1918. Planters and country merchants as well as 
factories demanded that the government establish a minimum 
price of 35 cents per pound of cotton; planters also demanded 
the closing of the cotton exchanges. The War Industries 
Board appointed a Committee on Distribution of Cotton and 
on November 13 ruled that short selling be prohibited on the 
New York and the New Orleans exchanges. Hedge selling 
against actual cotton was permitted, but the hedger had to 



300 PRICES AND PRICE CONTROL DURING THE WAR 

sign an affidavit proving ownership of the spot cotton hedged 
with sales of futures. In December, 1918, trading became 
once more unrestricted. 

The domestic consumption and the exports of cotton from 
19 1 3-1 4 to 191 7-18 were as follows: 

Consumption Exports 

1913-14 5,626,078 9,150,801 

1914-15 5,597,362 8,544,563 

1915-16 6,397,613 6,191,110 

1916-17 6,788,505 5,739,009 

1917-18 6,591,336 4,476,124 

Wool 

The number of sheep in the United States has been steadily 
declining; the decrease from 1900 to 1910 was from 61,503,713 
to 52,447,861 or 14.7 per cent.' However, this decline has been 
partially due to the change in the date of enumeration from 
June I to April 15; many lambs are born during the interval, 
and on many ranches in the West the lambs are not definitely 
counted so early in the year as April 15. The census considers 
that should the enumeration have been made on June i the 
number of spring lambs would have been about 19,000,000 
or 20,000,000 instead of 12,804,000, as reported on April 15. 
On the other hand the number of older sheep would have 
been less because of slaughter and death from other causes, 
by between one and two million. In view of these considera- 
tions, it is probable that if the enumeration of 1910 had been 
made as of June i there would have been between 56,000,000 
and 58,000,000 sheep and lambs as compared with 61,503,713 
in 1900. The number of sheep declined to 49,719,000 in 1914 
and to 48,900,000 in 1918.^ There has been an evidence of 
decrease not only in such States as Vermont, Ohio, Texas 
and California, but even in the northwestern section of the 
country, in Idaho, Montana and Wyoming, where many 
grazing regions have been overstocked and where the home- 
steader and the farmer have been encroaching more and more 
upon the ranches. 

1 Abstract of the Thirteenth Census of the United States, p. 329. 

2 Reference Handbook of Food Statistics in Relation to the War, pp. 58-59. 



THE UNITED STATES 3OI 

For many years previous to the war the supply of home 
grown wool was entirely inadequate to meet the demand ; the 
United States has been importing about one-half of the wool 
needed in the production of textiles.^ The importation 
reached its highest level in 1916, when it rose to 534,828,000 
pounds as compared with 308,083,000 in 1915 and 247,649,000 
in 1 914; the domestic production during these years was 
around 290,000,000 pounds. Imports declined in 1917 to 
372,372,000 pounds. 

The price of wool advanced from 1914 to 1918 from 17.6 
cents to 47.2 cents per pound; at the end of 1917 it was 58.2 
cents per pound. Price advances of scoured wool (Ohio, fine 
fleece) in the Boston market were^ from 57 cents in July, 
1914, to 65 cents in July, 1915, and 76 cents in July, 1916; 
the average prices for 191 5 and 191 6 were 66^ cents and 77^ 
cents respectively. A rapid advance in the price began dur- 
ing the latter part of 191 6 and particularly after the United 
States entered the war, rising to $1.69^ cents in December, 
1917. 

When the price became stabilized in May, 191 8, scoured 
wool was selling in Boston at $1.81 cents. The price of wool 
was established by the Price Fixing Committee of the War 
Industries Board after a number of conferences with growers 
and dealers. The scoured value in Boston on July 30, 191 7, 
was taken as a price basis. Prices based upon this value 
ranged from $1.07 a pound for choice common and braid to 
$1.75 for choice fine and fine medium staples. Growers had 
agreed to deliver the clip to dealers who in turn had under- 
taken to distribute it upon a definite compensation according 
to priorities established by the Priorities Board. The govern- 
ment provided that it was to have first call upon any portion 
of wool it required and could allot the balance to mills manu- 
facturing for civilian needs. Dealers were permitted to make 
a charge of 3 per cent of the selling price if the wool was not 
graded, and 3^ per cent if graded. This commission covered 

1 Yearbook of the Department of Agriculture, 1916, p. 30. 

2 War Industries Board, Bulletin of Monthly Prices during the War, November, 
1918, p. 72. 



302 PRICES AND PRICE CONTROL DURING THE WAR 

all storage, cartage and Insurance, and was to be added to 
the price of the wool as It left the dealer's hands. Dealers in 
wool were to be approved by the War Industries Board and 
no one not approved was allowed to buy. 

Wool growers, wool dealers and woolen manufacturers were 
represented on a government committee which took charge of 
the details of operation of the order. 

The government took over the entire domestic supply of 
wool and also bought a considerable quantity of Imported 
wool which it was able to secure from the British Government 
at lower prices than those at which it bought the domestic 
material. Much the larger proportion of the supply bought 
by the government was apportioned among Its clothing con- 
tractors, the remainder, especially such grades as were not 
suitable for government needs, being sold to those who were 
manufacturing for civilian use. At the unexpectedly early 
close of hostilities, the government found itself In possession 
of a large supply of wool for which it had no further use.^ 

Textiles 

The price of cotton yarns dropped from an average of 22 
cents a pound from July i, 1913, to June 30, 1914, to a little 
over 16 cents during the last quarter of 1914.2 The lowest 
level was reached in March, 1915, when cotton yarn was selling 
at 14.5 cents a pound. The average for 191 5 was 17J cents. 
A reaction against low prices set in during the latter part of 
that year and the price rose from 17 cents in September, 1915, 
to 21 cents in December. There was an almost uninterrupted 
advance through 19 16, which brought the price up to 38^ 
cents a pound in December, 191 6. After a slight fall at the 
beginning of 1917 prices started once more to advance, cotton 
yarn being quoted at 63 cents a pound during the second and 
third quarters of 191 8. 

1 F. W. Taussig: "Price Fixing as Seen by a Price Fixer," Quarterly Journal of 
Economics, February, 1918, p. 213. 

2 War Industries Board, "Monthly Fluctuations of Prices under Control," 
November, 1918, p. 67. 



THE UNITED STATES 303 

The fluctuations in the price of print cloths followed those 
of cotton yarns. The price rose from its low level of 2.44 
cents a yard in December, 1914, to 3.2 cents in December, 
191 5, and to 5.4 cents in December, 191 6. The feverish buy- 
ing of 1 91 7 advanced the price to 8| cents by December of 
that year. The highest level was reached in April, 191 8, 
when print cloths sold at 13.06 cents a yard. 

The control of prices of cotton goods began on June 8, 1918, 
when the War Industries Board upon consultation with the 
cotton manufacturers established the following net maximum 
prices on mill on basic cotton products : 



36" 


48 X48 


3.00 yd. 


sheeting 


60 c. per lb, 


36" 


56 x6o 


4.00 yd. 


sheeting 


70 c. per lb. 


381" 


64 X 60 


5-35 yd. 


print cloth 


83 c. per lb, 


38^' 


80x80 


4.00 yd. 


print cloth 


84 c. per lb. 



Standard wide and sail duck, 37I per cent and 5 per cent from list. 
Standard army duck, 33 per cent from list. 

These prices took effect on July i, 1918, and were to remain 
in force until October i , the terminal date later being changed 
to November 16. They represented a reduction from quoted 
market prices of about 20 per cent to 30 per cent and applied 
to all primary civilian purchases as well as to the purchases of 
our government and of the governments of those countries 
which were associated with us in the war.^ 

In accordance with the agreement between the representa- 
tives of the cotton manufacturing industry and the War 
Industries Board, various dififerentials were fixed at different 
dates for a full line of cotton fabrics. They were based on 
rather inadequate information and the Federal Trade Com- 
mission was entrusted with the task of collecting and analyzing 
the cost of production data, for the purpose of permitting the 
government to know the situation better before entering into 
subsequent agreements. Besides cotton fabrics and wool, the 
following fibers and textiles were brought under control: 
binder twine, manila fiber and rags. 

1 Price Fixing Bulletin, No. 8, Division of Planning and Statistics, War Indus- 
tries Board. 



CHAPTER XI 

Miscellaneous Products 

Chemicals 
Wood Alcohol 

Wood alcohol was selling at 25 cents a gallon between July, 
1913, and October, 1915. By November, 1915, it began to be 
used for direct war purposes and its price rose to about 30 
cents a gallon. Because of large export requirements, the 
price continued to advance all through 191 6, reaching 50 
cents a gallon In November and 60 cents In December of 
that year. In 191 7, the demand was greatly Increased by 
our own mlhtary requirements and the price advanced still 
further. It reached 70 cents in March, at which figure it 
stood until a new rise brought It up to 90 cents in November 
and December, 1917.'- 

In the latter month the price of wood alcohol was fixed by 
an order of the War Industries Board. This order. Issued on 
December 24, 191 7, commandeered all wood chemicals for a 
period of six months. ^ It was renewed in July for another 
six months. The price of wood alcohol was fixed at 50 cents 
a gallon, f. o. b. shipping point. Some of the other wood 
chemicals which were commandeered In December, 191 7, 
were: acetate of lime, acetic acid, refined alcohol, pure 
methyl alcohol and formaldehyde. 

Acetate of Lime 

Acetate of lime commenced to rise In price somewhat 
earlier than wood alcohol. After October, 1914, the usual 
demands were enormously Increased by orders from Europe 
and the price advanced sharply, rising from $1.52 per 100 

iWar Industries Board, "Market Prices of Commodities under Control- 
Chemicals." 

2 War Industries Board, "Price Regulation by Government Agencies — Chemi- 
cals and Explosives." 

304 



THE UNITED STATES 305 

pounds In October, 1914, to $4.03 in October of the fol- 
lowing year, and to $7.03 in February, 1916, which was the 
highest level it reached during the war. In October, 191 7, a 
reaction set in, largely due to heavy overbuying in the pre- 
vious year, the price dropping to $3.53 per 100 pounds. 
An upward movement set in again after our own entry into 
the war, the price rising to $6.03 in October, 1917. In 
December the industry passed under the control of the gov- 
ernment, which commandeered this chemical at 4 cents a 
pound. 

Ammonia 

Until May, 19 16, the supply of ammonia was sufficient to 
meet all demands and the price remained at its prewar level 
of 3.38 cents a pound. The price gradually advanced to 4.5 
cents by June, 191 6, but did not begin to rise rapidly until 
our own entry into the war. The increased use of ammonium 
nitrate as an explosive added greatly to the demand for 
ammonia and led to an accelerated upward course, ammonia 
selling at 13.25 cents a pound in November, 191 7, when the 
Food Administration fixed a maximum price of 8| cents per 
pound, carload lots. Ammonia was the only chemical whose 
price was fixed by the Food Administration. The Adminis- 
tration undertook also to allocate the output. 

Nitric Acid 

The price of nitric acid remained stationary until July, 
1915. By that time the large contracts for explosives from 
the Allied governments created a demand for nitric acid far in 
excess of the available supply. Prices rose to 8.9 cents in 
September, 1916, and remained at this level until June, 1916, 
when a decline set in which brought the price down to 6.3 
cents in January, 1917. Heavily increased production, which 
developed under the stimulus of high prices and large profits, 
accounts for the decline. It was, however, only temporary. 
Our own war needs led to a new advance, the price having 
risen in 191 7 and in 1918 to even higher levels than in 191 6. 
In October, 191 7, nitric acid was quoted at 9.45 cents a pound 



306 PRICES AND PRICE CONTROL DURING THE WAR 

and In June, 1918, at 9.63 cents. It was during the latter 
month that the War Industries Board fixed the maximum 
price at 8^ cents per pound to government and pubHc. 

^Nitrate of Soda 

Practically all the world's supply of nitrate of soda comes 
from Chile. During the early months of the war, because of 
the shutting off of the German market, which normally had 
consumed about one-third of the Chilean output, and because 
of the swamping of other countries by extra cargoes diverted 
to their ports, prices fell from a comparatively low average 
of $2.52 for 191 3 to $1.90 cents In November, 1914. More 
than half of the nitrate plants In Chile were forced to shut 
down. The depression continued until April, 1915, when the 
demand for nitrate In the manufacture of explosives began 
to be felt. The price rose to $2.90 In December, 191 5, and to 
$3.60 In March, 1916. High prices stimulated production and 
led to an enormously Increased output. The price fell grad- 
ually, reaching $2.90 by October, 191 6. An Increased demand 
both for explosives and fertilizer, combined with the shortage 
of ocean tonnage, started the price once more on Its upward 
movement. It went up to $4.73 In October, 1917, when, In 
order to curtail speculation, a government central purchasing 
board was appointed. Since January, 1918, the determination 
of the uniform price, as well as the control of the distribution 
of nitrate of soda, was placed in the hands of the Nitrate 
Committee. The price to importers in the United States was 
based on the average monthly cost In Chile and to this aver- 
age price was added a fixed charge of 2.5 per cent of landed 
costs In this country as a brokerage charge. This meant a 
price of $4.23 per hundredweight of 95 per cent nitrate 
up to the month of June, when it was reduced to $4.05. In 
July it was raised to $4.10 and in August to $4.30^. 

Sulphuric Acid 

There was a steady increase in the supply of sulphuric acid 
during 1913 and 1914, and the demand, which under normal 



THE UNITED STATES 307 

conditions comes chiefly from the fertiHzer industry, was not 
sufficient to absorb the large output; the situation became 
so acute by January, 191 5, that many plants reduced their 
operations and some shut down entirely. Sulphuric acid 
was selling at one cent a pound, with few opportunities to sell 
even at that price. Then came a demand for sulphuric acid 
in the manufacture of munitions and by the summer of 191 5 
this demand became so insistent that a feverish productive 
activity developed. The supply, however, was not sufficient 
to meet the requirements and the price soared. Sulphuric acid 
which for two years and a half went begging at i cent a pound 
rose to 1.75 cents in September, 1915, to 2 cents in January, 
1916, and to 2,5 cents in February of the same year. By 
August, 191 6, the price fell to 1.5 cents, around which figure 
it fluctuated through the latter part of 191 6 and the early 
part of 191 7. Because of expansion of war requirements, an 
upward movement began In July, 191 7, the price rising to 2|^ 
cents by March, 1918. In June, 1918, the War Industries 
Board fixed a maximum price on sulphuric acid effective for 
a period of three months. It was $28 per ton of 2,000 pounds, 
f. o. b. works in sellers' tank cars. 

Hides and Leather 

The price of packers' heavy hides (native steers) rose from 
19.4 cents per pound in July, 1914, to 25.8 cents in July, 
1915.' The increase during the following year was not very 
pronounced, the price having advanced only 1.2 cents by 
July, 1 91 6. Prices began to climb upwards more rapidly 
during the latter part of 191 6 and in January, 191 7, hides 
were selling at 33.5 cents a pound. At the time of the 
entry of the United States into war the price was 30.5 cents, 
rising again to the January rate during the subsequent 
months. New high levels were reached in November and 
December, 191 7, when hides were selling around 35 cents a 
pound. The price dropped to about 32.8 cents in January 
and to 26.25 cents in March, 1918. Hides were being quoted 

'■ Monthly Review of the U. S. Bureau of Labor Statistics, February, 1918, p. 103. 



308 PRICES AND PRICE CONTROL DURING THE WAR 

at 32.4 cents when the government in agreement with the 
hide interests stabiHzed the price on July 19 (to become 
effective August i) at 30 cents a pound. ^ 

Differential prices were fixed for different grades of hides 
and all hides were to be bought and sold on a selected basis, 
according to rules issued by the Hide and Skin and Tanning 
Material Section of the War Industries Board. 

The prices of sole leather (oak) did not follow the fluctua- 
tions in the price of hides. While the latter advanced from 
July, 1914, to July, 1915, 6.5 cents, the leather went up only 
2 cents (from 47.5 cents to 49.5 cents a pound). The advance 
from July, 1915, to July, 1916, was entirely out of proportion 
to the increase in the price of hides, the latter rising only 1.2 
cents, while leather advanced 14 cents (from 49.5 cents to 
63.5 cents a pound), selling in July, 1917, at 81.5 cents a 
pound and in July, 191 8, at 83 cents. ^ Imported sole leather 
(hemlock — Buenos Ayres and Montevideo) was quoted during 
1914 and 1915 at between 29.5 cents (August, 1914) and 32.5 
cents (January, 1915).^ The rise during the first half of 1916 
brought the price up to 37 cents, at which figure it stood 
from May to September, a rapid advance occurring after this 
date, which brought the price up to 57 cents in December, 
1916. The highest figure was reached in March, 1917, when 
imported leather was selling at 59.5 cents, the average for 
the year being 53.54 cents. At the beginning of 1918 the 
price was 49 cents a pound, and it was this price that ruled 
through 1918, with the exception of the months of March and 
April, when leather was quoted at 45.5 cents. 

Following its action in fixing maximum prices on hides and 
skins, the War Industries Board, in agreement with the sole 
leather group of the Tanners' Council, established a schedule 
of maximum prices for sole and belting leather to become 
effective on August 9, 191 8. In conformity with the usual prac- 

1 Monthly Labor Review, December, 1918, p. 11 1; War Industries Board, Bulle- 
tin of Monthly Prices during the War, November, 1918, p. 65. 

^ Monthly Labor Review, May, 1919, p. 145. 

2 War Industries Board, Bulletin of Monthly Prices during the W'ar, November, 
1918, p. 68. 



THE UNITED STATES 309 

tice, the prices were to hold for three months. They varied 
from 34 cents for Buffalo dry hide overweight to 96 cents 
for best grade heavy packer oak belting butts. It was espe- 
cially stated that maximum prices did not mean fixed prices 
and that It was anticipated that within the maximum prices 
the laws of supply and demand would have their influence. 

On August 14 the War Industries Board informed the tan- 
ners of upper leather that It would insist on Its ruling that the 
only permissible colors for the tanners to make and shoe 
manufacturers to cut after October i were black, medium 
dark shade of brown and tan. 

Rubber 

Rubber Is one of a very few commodities whose price has 
not been to any considerable degree affected by the war. 
Enormous growth of the rubber plantation Industry during 
the last few years, the falling off of rubber Imports Into 
Germany and the character of the War Trade Board rubber 
allocations were some of the factors responsible for this 
phenomenon.' The low level of Brazilian (wild) and Cey- 
lon (plantation) rubber prices running throughout the period 
of the war has been broken by violent rises only three times. 
The first Important advance was that of plantation rubber in 
the latter part of 19 14, which was due to Great Britain's declar- 
ing rubber as contraband of war In October of that year and 
to the establishment In November of an embargo on rubber 
shipments from any English ports. The price of Ceylon rub- 
ber rose from 56.5 cents per pound In August to 74.5 cents in 
December, 1914, and to 81 cents In January, 1915. When the 
embargo was lifted for the United States In January, 191 5, 
the price fell back to about 63 cents a pound. The next ad- 
vance, both for Para and Ceylon variety, occurred in the 
latter part of 191 5 and the early part of 1916, the highest 
level being reached in January, when the price was $1.05 a 
pound for Ceylon and $1.00 for Para. This rise as well as the 

1 War Industries Board, Price Fixing Bulletin, No. 2, August, 1918. 



310 PRICES AND PRICE CONTROL DURING THE WAR 

one at the beginning of 191 7 was due largely to the activities 
of German submarines. 

The first fixed prices of rubber became effective on May i , 
1918. They included only three grades of rubber, one Para 
and two plantation grades, the price for the first, upriver, fine, 
being fixed at 68 cents per pound and the prices for the latter 
at 63 and 62 cents. ^ This short schedule was followed on 
May 14, 1918, by a much longer one, embracing various 
plantation qualities, Mexican guayule. Para grades, Central 
American and African grades, Balata, Gutta Percha and 
many others. The lowest fixed price was 14 cents per pound 
for Sarawak grade of Gutta Joolatang (Pontianac), the high- 
est for Red Macassan Gutta Percha — $3.00 per pound. 
Supplementary lists of prices were issued on May 29, June 
I3> July 2 and July 6, 1918. All prices were on the basis of 
c. i. f. New York. 

The fixing of rubber prices, as well as the promulgation of 
certain rules and regulations to govern the rubber industry, 
was made necessary by the inclusion of crude rubber in the 
list of commodities whose importation into the United States 
was limited from April 30, 1918, until further notice. This 
limitation of imports was resorted to in order to release every 
possible ship for transatlantic uses. The War Trade Board 
feared that it would invite hoarding, speculative dealing and 
profiteering, hence the fixing of prices and the option granted 
to the United States Government to purchase all or any part 
of the crude rubber at optional prices. The rubber importers 
were not to sell, transfer or deliver rubber at prices greater 
than those set forth in the government option, except such 
rubber as they may have been under an obligation to deliver 
under a contract executed and in force prior to May i, 1918.2 

The War Trade Board restrictions permitted the licensing 
of rubber importations at the rate of 100,000 long tons per 
year, the amount imported in 191 7 being 181,088 long tons. 
The cut in the rubber imports into the United States led to 

1 War Industries Board, Price Fixing Bulletin, No. 2, August, 1918. 

2 Ibid. 



THE UNITED STATES 3II 

the fall of prices in the primary markets where the production 
was considerably in excess of the amounts allocated for ship- 
ments to this country. The maximum prices fixed for rubber 
represented one of the few examples of fixed prices which were 
well above the market quotations. 

Laggings below the maximum prices occurred also in zinc 
and lumber. 

Lumber 

Not only were there no important advances in the price of 
lumber during I9i4and 1915, but in the case of some varieties, 
such as hemlock, gum, yellow pine, the price declined slightly 
from what it had been just before the declaration of war. 
The advance in price commenced in the latter part of 1916, 
especially for varieties demanded for war purposes, Douglas 
fir rising from $7.50 per one thousand feet in August to $9.50 
in December.^ The average price of Douglas fir for 191 7 was 
$10.38; it began to rise more rapidly after the United States 
entered the war, the quotation reaching $18.50 in June, 191 7. 
The price of yellow pine rose from an average of $10.00 per 
one thousand board feet in the first quarter of 19 14 to $30.00 
in the second quarter and $35.00 in the third quarter of 1917.^ 
Beginning with December, 191 7, f. o. b. mills price was estab- 
lished for Douglas fir. It was a fixed price to the government 
only. On June 15, 1918, maximum prices were fixed to apply 
to the government, to the Allied governments and to the 
public.^ Only sales by manufacturers were regulated. The 
United States Government had the option on all contracts 
and the War Industries Board could allocate the lumber either 
to the government or to other essential users. The balance 
was released for sale to commercial buyers. 

According to regulations, wages and labor conditions in 
force were to remain unchanged and contracts entered into in 
good faith previous to the promulgation of the order were 

^ War Industries Board, Bulletin of Monthly Prices during the War, November, 
I9i8,p. 104. 

2 Ibid., p. 109. 

^ War Industries Board, "Price Regulations by Government Agencies — Lumber 
and Building Materials." 



312 PRICES AND PRICE CONTROL DURING THE WAR 

to be performed in accordance with their terms, subject to 
government priority orders. Maximum prices on Douglas fir 
ranged from $12 per thousand for No. 3 to $20 per thousand 
for No. I. 

On January 28, 191 8, maximum prices to the United States 
and the AUied governments were fixed on southern or yellow 
pine and somewhat later, in April, 191 8, North Carolina pine 
and New England spruce also came under regulation. In 
June, 1918, the prices on these varieties of lumber were raised, 
the increase in the case of yellow pine lumber being about 
$4.80 per thousand over the former government list prices. 
The new prices were approximately the same as those ruling 
on the market at the time of their establishment. The max- 
imum price of Pennsylvania hemlock was fixed in April, 191 8. 
The price fixing agencies for lumber besides the War Indus- 
tries Board were the North Carolina Emergency Bureau for 
North Carolina pine, the Southern Pine Emergency Bureau 
and Alabama and Mississippi Emergency Bureau for south- 
ern or yellow pine and the New England Spruce Emergency 
Bureau for New England spruce. When spruce for aeroplanes 
became one of the most necessary things, the United States 
Spruce Production Corporation was formed, particularly for 
the purpose of getting out spruce from the Pacific northwest. 

There was a demand on the part of producers for an ad- 
vance of the maximum prices beyond those established by 
the government. This demand was not heeded even though 
the producers were able to show a rise in their costs of produc- 
tion. The maintenance of the unchanged maximum was 
announced t6 rest on the ground that the output heretofore 
maintained was no longer needed and that the industry should 
be confined to military and essential.^ 

Building Materials (Other than Lumber) 

It is a difficult matter to standardize building materials 
by kinds and to show by representative quotations the state 

1 F. W. Taussig: "Price Fixing as Seen by a Price Fixer," Quarterly Journal of 
Economics, February, 1918, p. 229. 



THE UNITED STATES 313 

of trade In these materials as a whole. There are too many 
variations In quality and the character of the products makes 
their prices more subject to local conditions than are the prices 
of most other commodities. This Is due particularly to the 
cost of transporting building materials to central markets.' 
In order to make possible a comparison of the general rise of 
building materials (other than lumber) with other groups of 
commodities, an Index has been constructed by the Price 
Section of the War Industries Board showing the movement 
of the prices of brick, cement, glass, gravel, lime, paint mate- 
rials, putty, rosin, sandstone and tar for the period Jan- 
uary, 1913, to date. The price of "Building Materials," as 
shown by this Index number, has lagged behind the prices of 
"Food," "Metals and Metal Products" and "All Commodi- 
ties." Thus v/hile In the last quarter of 191 6 "Food" in- 
creased 44 per cent, "Metals and Metal Products" ']'] per 
cent, and "All Commodities" 41 per cent, the "Building 
Materials," Index number showed an Increase over the pre- 
war base of only 21 per cent. The general rise In the price 
of "Food" and that in "All Commodities" was about twice, 
the rise In the "Metals and Metal Products" group four 
times as great as that In the "Building Materials" group. 
This same relation continued In 191 7. In the last quarter of 
1917, " Food " was 83 per cent above Its prewar base, " Metals 
and Metal Products," 88 per cent, "All Commodities" 81 
per cent, while "Building Materials" were only about 40 
per cent. The rise after January, 191 8, was relatively greater 
for "Building Materials" than for other groups, so that by 
October, 191 8, it represented an 89 per cent Increase above the 
prewar level, as compared with 91 per cent for "Foods," 
96 per cent for "Metals and Metal Products" and 103 for 
"All Commodities." 

The rise in the prices of building materials (other than 
lumber) may be attributed mainly to an advance in costs 
and not to an increase In demand. Building operations In 
1 91 5 were 10 per cent above the prewar average, In 191 6, 

1 Price Fixing Bulletin, No. 6, November, 1918, p. i. 



314 PRICES AND PRICE CONTROL DURING THE WAR 

they were 35 per cent above this average and In 191 7, 38 per 
cent below. 1 

By September, 191 8, prices were fixed on Portland cement, 
building tile, sand and gravel. ^ At the time of the fixing of 
the price of cement, In May, 191 8, It was selling at $2.56 
a barrel. New York market, or 62 per cent above the prewar 
figure of $1.58. Fixed prices, to remain In force until August 
31, 1 91 8, applied to the purchases by the United States Gov- 
ernment only, and ranged from $1.60, f. o. b. plant location 
for Buffington, Indiana, cement to $2.00 for the Oswego, 
Oregon, product. In the open market prices continued to rise, 
reaching $2.90 a barrel In September, 191 8. A slightly modi- 
fied schedule was adopted by the Price Fixing Committee of 
the War Industries Board on August 23, 1918, after Its con- 
sultation with the War Service Committee of the Industry. 
The revised schedule, which reduced prices by three cents a 
barrel, went Into effect In September, to remain In force for 
four months. 

Prices for building tile were fixed on July 25, 1918, on the 
basis of prices charged prior to July i of that year. As in the 
case of cement they applied to government purchases only. 
No definite date was set during which they were to remain In 
effect. 

Prices on sand, gravel and crushed stone were fixed, to the 
government only, on July 10, 191 8, to be effective for the 
period ending October 31, 191 8. 

Sand $0 . 75 per ton 

Gravel i .60 per ton 

Crushed stone i .85 per ton 

These prices were for full scowload lots delivered f. o. b. scow, 
within the lighterage limits of the port of New York. For 
deliveries made outside of these limits the extra cost of towage 
could be added to the price. On August 28, the Price Fixing 
Committee established prices for the States of New Jersey, 
Delaware and Pennsylvania east of and Including Harrlsburg. 

1 Price Fixing Bulletin, No. 6, November, 191 8, p. i. 

2 Ibid., No. 5, September, 1918. 



THE UNITED STATES 315 

These prices were, for deliveries in full scowload lots, f. o. b. 
scow : 

Sand $0 . 60 per ton 

Gravel i . 00 per ton 

Crushed gravel 1.25 per ton 

The government fixed the price of sand because in certain 
localities it was engaged, directly or through contractors, in 
dock and harbor operations and was therefore the purchaser 
of all the available sand and gravel in the vicinity. 

Newsprint Paper 

The rise in the price of newsprint paper since the outbreak 
of the war has been so great that on April 24, 191 6, a resolu- 
tion was passed in the United States Senate requesting the 
Federal Trade Commission to investigate the newsprint paper 
industry of the country. The commission in a letter dated 
June 13, 191 7, to the President of the Senate, recommended 
governmental control of the production of print and book 
paper. It found that for the second half of 1916 the 
prices for print and book paper were from 65 to 84 per cent 
higher than in 191 5 and that the average profits of 41 of the 
book making paper mills for 191 6 were 100 per cent more than 
for the previous year.^ The increase in the price from 191 6 
to 191 7 was about 50 per cent. In consequence of the report 
of the Federal Trade Commission suit was brought by the 
Attorney General against the News Print Manufacturers 
Association, the so-called paper trust. Many members of 
this association were indicted for combination and contracts 
in restraint of trade. 

On August 30, 191 7, the President, under his authority to 
control the price of commodities purchased by the govern- 
ment, fixed the price of print paper for the Official Bulletin 
at 2^ cents a pound. Previous to this, in February, 191 7, 
certain manufacturers requested the Federal Trade Com- 
mission to fix "a fair and reasonable price for the sale of 
newsprint paper for use in the United States." Such a price 

^ C. R. Van Hise: Conservation and Regulation, p. 37. 



3l6 PRICES AND PRICE CONTROL DURING THE WAR 

was fixed by the commission on March 3, but soon afterwards 
four of the signatories to the agreement were indicated for 
violations of the Sherman Anti-Trust Law.' On November 
26 a new agreement was made between the Attorney General 
and certain print paper manufacturers, according to which 
the price of newsprint paper, on all new contracts to January 
I, 1 91 8, and on all contracts in existence on January i, 1918, 
or made thereafter, was not to exceed the following amounts : 

Roll news in car lots $3 .00 per 100 pounds, f. o. b. at the mill 

Roll news in less than car lots 3-25 per 100 pounds, f. o. b. at the mill 

Sheet news in car lots 3 -SO per 100 pounds, f. o. b. at the mill 

Sheet news in less than car lots 3-75 per 100 pounds, f. o. b. at the mill 

This agreement provided that after April i, 191 8, maximum 
prices and terms of sale were to be determined and fixed by 
the Federal Trade Commission. All interested parties were 
invited to lay before the commission any pertinent data 
regarding the production and distribution of print paper. 
The commission held extensive hearings and examined cost 
figures, vouchers and accounts of several manufacturers. 
The new schedule of prices left the price of sheet news in 
car lots unchanged; the price of roll news in car lots was 
increased by 10 cents, while the price of roll news in less 
than car lots was reduced by 2^ cents and that of sheet news 
in less than car lots was reduced by I2| cents. 

The following maximum commissions for jobbers or other 
middlemen were provided: 

15 cents per 100 pounds on carload lots 

40 cents per 100 pounds on less than car lots 

60 cents per 100 pounds on less than ton lots 

These were added to the actual cost of paper at the mill or 
at the warehouse. 

It was set originally that the Federal Trade Commission's 
award which was made on April i, 191 8, should last for the 
duration of the war and three months thereafter, but the 
findings and the award of the commission were appealed for 
review to the United States Circuit Court, which on Septem- 

1 War Industries Board, Price Fixing Bulletin, No. 9, Paper, October, 1918. 



THE UNITED STATES 317 

ber 25, 1918, rendered a decision raising the prices of paper 
as follows : 

Roll news in car lots $3-50 per cwt. 

Roll news in less than car lots 3 ■ 62 J per cwt. 

Sheet news in car lots 3-90 per cwt. 

Sheet news in less than car lots 4 .02I per cwt. 

These revised prices, however, did not last very long. Be- 
cause of increases in wood cost, rates of wages and freight 
rates, prices were raised by the Federal Trade Commission 
twice, the last raise made July i, 1918, having brought up 
the prices to : 

Roll news in car lots $3 . 753: per cwt. 

Roll news in less than car lots 3 . Syf per cwt. 

Sheet news in car lots 4 . 155 per cwt. 

Sheet news in less than car lots 4 -271 per cwt. 



CHAPTER XII 

Conclusions 

Government price fixing during the war was guided little 
by economic principles. It was not uniform either in its 
objects or in its methods, feeling its way from case to case. 
It might be termed opportunist.^ 

The fixing of prices, according to Mr. Hoover, has not been 
evolved out of any desire to interfere with the operation of 
natural trade laws; it was "simply the result of the govern- 
ment being forced into the issue of becoming the dominant 
purchaser and thereby, willingly or unwillingly, the price 
determiner in particular commodities." Mr. Hoover was in 
favor of price fixing, because, according to him, an abnormal 
demand coupled with a shortage of supply produced a con- 
dition which tended to oppress the poor, and government 
control was necessary to curb speculation and profiteering 
which were putting the necessaries of life beyond the reach 
of the average man. The necessity for control was dictated 
not only by humanitarian considerations, but because there 
was danger in unrestrained competition, danger to the se- 
curity of the established institutions of law and order, danger 
from strikes by dissatisfied laborers and from riotings by 
angry mobs.^ 

The solving of the question of how low or how high should 
be the price fixed by governmental decrees is of paramount 
importance. According to President Wilson's statement of 
July 12, 191 7, the fixed price should be sufficient to "sustain 
the industries concerned in a high state of efficiency, provide 
a living for those who conduct them, enable them to pay good 
wages and make possible expansions of their enterprises." 

1 F. W. Taussig: "Price Fixing as Seen by a Price Fixer," Quarterly Journal of 
Economics, February, 1919, p. 238. 

^ Mr. Hoover's letter to the President, March 26, 1918; Mr. Hoover's speech 
before the Pittsburgh Press Club, April 18, 1918, and his other public utterances. 

318 



THE UNITED STATES 3I9 

It has been continually advanced that a "fair price" 
must take cognizance of the cost of production, but the cost 
varies depending upon the location of the producer, the 
character of his plant and his equipment, efficiency of manage- 
ment, etc. The fixed price, irrespective of any fairness or 
justice in the case, must be high enough to induce continued 
production of the highest costing portion of the required 
amount of goods.' The greater and the more insistent the 
demand, the greater the dependence upon every possible 
source of supply. 

The fixing of a "reasonable" price, when the supply of a 
commodity is not sufficient to meet the usual demand, can 
not prevent hardships and dissatisfaction. Price fixing 
alone does not solve the problem of keeping the poor provided 
with commodities; in fact, "reasonable" prices may aggra- 
vate the situation by giving people of means an incentive and 
an opportunity to acquire ahead of their actual needs, thus 
leaving the less fortunate ones without any supply. Unless 
some system of priority of distribution and of rationing is 
introduced in connection with price fixing, the latter is doomed 
to failure. 

The fixing of the whole chain of prices from the producer 
of the raw material to the retailer involves the fixing of 
margins for manufacturers and middlemen. The desire on 
the one hand to stimulate production and on the other to 
satisfy public demand for lower prices led the government in 
many instances to cut the margin of the wholesaler and re- 
tailer too low. This was true for flour, sugar, bituminous 
coal and a few other commodities. The harm done in the 
case of the first two articles was not very great, as grocers 
could afford to sell some things without profit as long as 
their other prices were left free. With regard to bituminous 
coal the situation was different; here the dealer's whole busi- 
ness is involved. Too narrow a margin lessened the interest 
of coal distributers in their work. It has been advanced 

1" Economic Difficulties in the Way of Successful Governmental Price Fix- 
ing," Economic World, July 21, 1917, p. 79. 



320 PRICES AND PRICE CONTROL DURING THE WAR 

that "if the jobbers in bituminous coal had been more sure 
of their ground, had had freer hands and larger margins to 
work on, no small part of the railway congestion from which 
the country had suffered so much in the winter of 191 8 might 
have been avoided."^ 

The experience with price regulation during the war has 
shown that prices can be controlled without giving rise to a 
great deal of evasion and without too much running counter 
to the competitive spirit which animates our industrial 
society when a great emergency, like the recent war, fires 
public imagination and inclines public opinion to favor any 
measures which are likely to advance the national cause. 
The best methods of control, however, are those which enlist 
the cooperation of the people, whose interests are to be 
affected by price regulating measures. 

1 B. M. Anderson: "The Price Fixing Policy," typewritten manuscript, p. 4. 
(Report of the Committee of the American Economic Association.) 



APPENDIX TO PART II 



A List of Commodities the Price of Which Was Brought 
under Government Control ^ 



1917 

August 
September 

October 

November 

December 

1918 

January 
February 
March 
April 

May 
June 
July 



August 

September 

October 



Coal, bituminous and semi-bituminous 

Coal, anthracite; coke; copper and copper wire; iron ore; pig iron; 

steel plates; wheat 
Steel billets and blooms; sheet bars; wire rods; skelp; sugar; sardines 
Bar iron; cast iron pipe; steel rails; wire; tin plate; ammonia 
Douglas fir; ammonium sulphate 



Wood alcohol; yellow pine; acetic acid; nitrate of soda 

Zinc sheet; binder twine; castor beans; castor oil 

Aluminum; blackstrap molasses (imported) manila fiber 

Hemlock; white pine; eastern pine; news-print paper; manganese 

ore; munition linters; quebracho 
Portland cement (domestic); hides; rubber; wool 
Harness leather; prunes; raisins; sulphuric acid; nitric acid 
Cotton goods, such as denims, ginghams, sheetings, tickings; cotton 

yarns and linters; wheat flour; rice; building tile; charcoal; hemp; 

sand and gravel 
Sole leather; glycerine; dynamite 
Cottonseed meal and oil; wool grease 
Burlap 



1 "Fluctuations of Controlled and Uncontrolled Prices," Price Fixing Bulletin, 
No. ID, December, 1918, pp. 5-7, 54. 



323 



Index Numbers of Controlled and Uncontrolled Prices of all Commodities by Months, August, 1916, 
to September, 1918. Average Prices for the Year August, 1916, to July, 1917= 100^ 

Controlled Uncontrolled 




iWar Industries Board. "Fluctuations of Controlled and Uncontrolled Prices." 

324 



Official U. S. Food Bulletin 



Harry A. Wheeler, State Food Administrator for Illinois. 
Chicago, Dec. 6. — Prices being paid by retailers for the staples named and the retail prices 
■which they should not exceed are as follows: 



Retailer 
Pays 
POULTRY 

Per lb. 



Turkeys — 

Dry picked- 
Fresh 31C to 33 c 

Cold storage 23c to 26c 

Chickens — • 

Hens and chickens — 
2 to 4 lb. , fresh .... 23c 
2 J to 4 lb., cold stor- 
age I8C to 20C 

4i to 5 lb., fresh .... 23c to 2Sc 
4I to 5 lb., cold stor- 
age i8c to 20c 

Roosters, fresh . . . . i8c to 20c 

Ducks 2Sc to 27c 

Geese 20c to 22c 



Consumer 
Should Pay 



Per lb. 

32c to 38c 
24c to 31C 



to 24c 24c to 29c 



19c to 2SC 

24c to 30c 

19c to 2SC 

20C to 2SC 

27c to 32c 

22C to 27c 



EGGS 
Per doz. 



Strictly Fresh — 

Candied- 
Extras, approx. 24 

oz., per doz 52c to 54c 

Cold Storage — 

Candied- 
Extras, approx. 

23 oz., per doz. . . . 365C to 39jC 
No. I, approx. 

22 oz., per doz. . .35c to 37c 
Note — Eggs in cartons ic per 
prices. 

HAMS 
Whole— Per lb. 
10 lbs. to 12 lbs. av- 
erage 31C to 32c 

14 lbs. to 16 lbs. av- 
erage 29JC to 30 jC 

BACON 
Whole pieces — Per lb. 

Best grades 42c to 44c 

Medium 37c to 38c 

LARD 
Per lb. 
Best kettle rendered — 

In cartons 27c to 28^c 

In bulk 27c to 28c 

Standard pure — 

In bulk 26|c to 275c 

Substitutes — 
In bulk 22c to 2SC 

COOKING OILS 
In cans — Per can 

Corn oil, pints 27c to 30c 

Corn oil, quarts . . . sojc to s6ic 
Cottonseed, small . . 28c to 32c 
Cottonseed, med . . . 56c to 63ic 



Per doz. 
53c to S9C 

37ic to 44|c 

38c to 42c 
dozen above 

Per lb. 
33c to 37c 
3iic to 35^c 

Per lb. 
45c to soc 
40c to 44c 

Per lb. 

31C to 36ic 
30c to 3SC 

29c to 342C 

245C to 31C 

Per can 

30c to 37jC 
S6jc to 70c 
3 lie to 40c 
63c to 70c 

RICE 

Per 100 lbs. Per lb. 

Fancy head $8.75 to $10.00 lofc to 14c 

Blue Rose 8.00 to 9.00 loc to 13c 

POTATOES 
Per 100 lbs. Per pk., 15 lbs. 
No. I Wisconsin, 
Minnesota and 
Dakota $1.85 to $2. 10 33c to 39c 



Consumer 
Should Pay 



Per lb. 

7iC to 8jC 



Per bag 
$2.80 to $2.95 
1 .42 to 1 .49 
.33 to .37 



.30 to 



35 



Retailer 
Pays 
SUGAR 
Per 100 lbs. 
Granulated in bulk $7.64 to S7.77 
FLOUR 
(Well known advertised mill brands in cotton 
bags.) 

Per bag 

i brl $2.65 to $2.70 

i brl 1.34 to 1.36 

S lbs 30 to .32 

Graham- — Pure — 
In 5 lb. bags. . . .27^ to .30 
RYE FLOUR 
(In cotton bags) 
Bohemian sty.. Per bag 

mixed, J brl. $1 .27 to $1 .33 
Dark, pure, | 

brl 1 . 12 J to 1 .22 

Bohemian sty., 

mixed, s lbs.. .29 to .30 
Dark, pure, 5 

lbs 26I to .29I 

CORN MEAL 
Per 100 lbs. 

White, bulk $5-45 to $5-75 

5.80 to 6.00 
MILK 



Per bag 

$1.35 to $1.45. 

1.20 to 1.35 



.32 to 



30 



Yellow, bulk . 
Evaporated — 

(unsweetened) 
Condensed — 

(sweetened) — 
Highest grades . . 
Medium grades. . 



.29 to .34 

Per lb. 
6c to 6Jc 
6c to 70 



Per can 
. ii^c to i2ic 



.iSfc to i7ic 
. .I4fc to isic 
BUTTER 
Per lb. 



Per can 
13c to ISC 



i6c to 22c 
163C to i8Jc 



Creamery — Per lb. Per lb. 

Extras, fresh, tubs. 475C to 48|c 48^0 to 53ie 
Firsts, fresh, tubs.. 431c to 45c 445c to soc 

Cold storage 41c to 43c 42c to 48c 

Note — IC higher in cartons than tubs. 
OLEOMARGARIN 
Standard Grades — Per lb. Per lb. 

In cartons 29c to 30c 32c to 3SC 

In rolls 28c to 29c 31c to 34c 

Medium Grades — 

In rolls and bulk. . .26c to 28c 29c to 33c 
BEANS 

Per 100 lbs. Per lb. 
Navy, hand- 
picked $15.50 to $16.50 I7ic to 2oJc- 

Lima 15.00 to 16.00 17c to 20c 

PRUNES 
California — 

Santa Clara— Per lb. Per lb. 

so to 60 prunes, per 

lb iiic to 13c 13c to 17c 

60 to 70 prunes, per 

lb lofc to life 13c to i6c 

90 to 100 prunes, 

per lb 9jc to loc iic to 14c' 

HOMINY 

Per 100 lbs. Per lb. 

In bulk $5-50 to $6.00 6c to 7c- 



325 



326 



PRICES AND PRICE CONTROL DURING THE WAR 



Official U. S. Food Bulletin — Continued 



CHEESE 
American, full cream, 

whole 28c to 32c 34c to 40c 

American, full cream, 

cut to order 28c to 32c 3Sc to 40c 

American, full cream, 

brick, whole 29c to 31c 33c to 39c 

American, full cream, 

brick, cut to order 29c to 31c 36c to 43c 



SALMON 
Canned Salmon — 

i-lb., tall cans — Per doz. Per can 

Pink $1.95 to $2.10 19c to 23c 

Red Alaska 2.7s to 2.95 27c to 33c 

SYRUP 

Per doz. cans Per can 
Corn, 90% and 
cane 10% mix- 
ture $1.42^ to $i.S2j 13c to 17c 



FISH — There are heavy runs of blue back herring and cisco. The herring are costing retailers 
8 to 10 cents per pound and cisco 12 to 14 cents per pound. These are good fish, and the cisco 
especially are very palatable. Try these fish for Friday. 

Delivery service is expensive. Carry your goods home if you can and do not exact more than 
one delivery daily. 

If you carry goods home you are entitled to less than the highest prices. 

Many grocers have inaugurated a system of charging sc per delivery. This is a just charge if 
prices are reduced. 

All quotations are for high grade goods unless otherwise stated. If you pay highest prices you 
are entitled to high quality. 



INDEX 



Acetate of lime (U. S.) : price fluctuations, 304; 

control, 30s. 
Agricultural laborers (U. S.), wages, 196. 
Aluminum (U. S.) : price fluctuations, 290; 

control, 205, 290-291. 
American colonies, early conditions, 10. 
Ammonia (U. S.) : price fluctuations, 305 ; 

control, 217, 305. 
Animal food (G. B.), price fluctuations, 13-15. 
Arsenic industry (U. S.), control, 217. 
Articles of Commerce Act (G. B.), 107. 
Asquith, Herbert H., 96-97. 
Australia, drought of 191S, 50. 

Bacon: 

(G. B.): price fluctuations, 26; profits, 68; 
control, 13s. 

(U. S.): price fluctuations, 185, 190. 
Baltimore: percentage of increase in cost of 

living, 201; wheat prices, 224. 
Bankruptcies (G. B.), decrease in, 83. 
Barley (U. S.): price fluctuations, 185; con- 
trol, 213. 
Baruch, Bernard M., 204, 287-288, 291. 
Beans: Great Britain, 140; United States, 213. 
Beer, near (U. S.), control of, 217. 
Bevan, 102. 

Binder twine (U. S.), control, 303. 
Board of Trade Committee on Prices (G. B.) : 

investigations, 66; powers, 108. 
Boots and shoes (G. B.): price fluctuations, 

34; profits, 73- 
Borrowing (G. B.) : large, by government, 

cause of rise in prices, 37. 
Bread: 

(G. B.): early legislation, 6; price fluctua- 
tions, 27; profits, 69. 

(U. S.) : price fluctuations, 190, 235-236; 
Baking Division of Food Administration, 
235; control, 217, 235-236. 
Brick (U. S.), control, 205. 
British Association for Advancement of Science, 

investigations, 80-81, 94. 
Bronze (G. B.), issues, 40. 
Buffalo, wheat prices, 224. 
Building materials (U. S.) : price fluctuations, 

312-313; control, 314-315. 
Butter: 

(G. B.): price fluctuations, 29; control, 136. 

(U. S.): price fluctuations, 185, 190, 259; 
control, 213, 259; profits, 260. 
Buying, reckless, 47. 

Calico Printers Association (G. B.), profits, 73. 

Call, G. E., 222. 

Calthrop, Guy, 147. 

Cannan, E., 63, 65, 84. 

Canned goods (U. S.), control, 213. 

Cattle: 

(G. B.), number, 158. 

(U. S.), price fluctuations, 185; productibn, 
252-254. 

Causes of the rise in prices: inflation of cur- 
rency, 36; obstruction of supply and intensi- 
fication of demand, 43; increased consump- 
tion, 45; reckless buying, 47; higher cost of 
production, 47; decline in supply of commodi- 
ties, 48; high freight and insurance rates, 58; 
taxation, 62; hoarding by consumer, 63, 104; 
profiteering, 64; high wages, 82; demands 
of government, 104; panic conditions, 104. 



Cement (U. S.), control, 205. 
Cereals (G. B.), price fluctuations, 19. 
Charcoal (U. S.), price fluctuations, 277. 
Charts: 

(G. B.): showing rise for 1915-1917, 19; 
course of wholesale prices, 171; rise in retail 
prices of food, 172. 
(U. S.): price of wheat and bulk flour at 
Minneapolis, 232; refiners' stocks of raw 
sugar, 244; index numbers of controlled 
and uncontrolled prices of all commodities 
by months. August, 1916, to September, 
1918, 322. 
Checks (G. B.), increase in use of, 41-42. 
Chemicals and drugs (U. S.): price fluctua- 
tions, 1913-1918, 182; control, 304-306. 
Cheese : 

(G. B.): price fluctuations, 30; profits, 67; 

control, 137. 
(U. S.): control, 213, 260; profits, 261. 
Chicago: percentage of increase in cost of liv- 
ing, 201; wheat prices, 227; milk situation, 
256-257. 
Chiozza-Money, Sir L., 60. 
Churchill, Winston, 61. 
Clarke, E. A. S., 284. 
Clothing: 

(G. B.) : price fluctuations, 33-34. 
(U.S.): price fluctuations, 1913-1918, 182, 
191-199, 201. 
Clynes, J. R., 96. 
Coal: 

(G. B.): price fluctuations, 1914-1917, 21, 
34-35; profits, 95; causes of high prices, 96; 
control, 142-150; appointment of Coal Con- 
troller, 147 ; Coal Mines Control Agreement 
Act, 149. 
(U. S.): production, 262, 271; price fluctua- 
tions, 185, 192-193, 263; control, 264-266; 
profits, 265, 267-268; jobbers' margins, 
268-269; retail prices, 269-271; remedies 
for coal shortage, 271-273; stimulation of 
production, 273; price fixing, 273-274, 
319-320. 
Cocoa (G. B.), price fluctuations, 21. 
Coffee (G. B.): price fluctuations, 12, 14-15; 

control, 141. 
Coke (U. S.): price fluctuations, 185, 275-276, 

279; profits, 277. 
Commission of Inquiry into Industrial Unrest 

(G. B.). 49. 
Committees and commissions established (G. 

B.), 163. 
Committee of Grain Exchanges in Aid and 

National Defense (U. S.), 224. 
Committee on National Expenditure (G. B.), 

investigation of, 73. 
Commodities, decline in supply of (G. B.), 48. 
Consumption in United States, 45, 54. 
Control: 

(G. B.): decentralization, 11 2-1 13; criticism, 

161-167. 
(U. S.) : powers of War and Navy Depart- 
ments, 203; agreements between govern- 
ment and producers, 204; Lever Food 
Control Act, 206-209. 
Copper (U. S.): price fluctuations, 185, 291; 

control, 205, 291-294. 
Copra oil (U. S.), control, 213. 
Corn Production Bill (G. B.), 154-1SS. 
Cornmeal (U. S.): price fluctuations, 185, 190; 
control, 213. 



22 



327 



328 



INDEX 



Cost of living: 

(G. B.): relation between prices and earn- 
ings, 88; cause of industrial unrest, loi. 
(U.S.): increases in, 197-202. 
Cotton : 

(G. B.): price fluctuations, 14, 20-21; im- 
ports, 54; profits of cotton spinning com- 
panies, 72. 
(U. S.): price fluctuations, iSs, 298-299, 
303; production, 298-299; consumption, 
298, 300; control, 299, 303; exports, 300; 
cotton fabrics, 205; cottonseed and cotton- 
seed oil, 213, 217; cotton yarn, 302. 
Cotton, Joseph P., 255. 
Courtauld's, Ltd. (G. B.), profits, 72. 
Cows (G. B.), restrictions on slaughtering of, 

so. 
Cunard Company (G. B.), profits, 73- 
Curdy, 123- 
Currency (G. B.) : expansion of, cause of rise 

in prices, 36; increase, 40. 
Customs duties (G. B.), cause of high prices, 62. 

Davenport, E., 258. 

Davenport, Lord, 109-110. 

Debts, total national, 44. 

Decline in supply of commodities (G. B.), 48. 

Departmental Committee on Prices (G. B.), 59- 

Destruction of property (G. B.), 49. 

Distress, absence of (G. B.), 80. 

Dried foods (U. S.), control, 213. 

Drink. See Liquor. 

Duluth, wheat prices, 224. 

Eastern Steel Company, 284. 

Eastman's (G. B.), profits, 75- 

Effects of high prices (G. B.) : increase in 

wages, 81, 84; decrease in bankruptcies, 83; 

improved conditions for work people, 79-80, 

82, 85. 
Eggs: 

(G. B.): price fluctuations, 31. 

(U. S.): price fluctuations, i8s, 190; con- 
trol, 213. 
Exports (G. B.): restrictions, 48; volume, 50- 

52. 

Fair price lists: Great Britain, los; United 

States, 216-218. 
Farm products (U. S.), price fluctuations, 1913- 

1918, 182. 
Federal Trade Commission (U. S.), 255. 
Feeds (U. S.): control, 217. 
Ferens, E. R., 96. 
Fertilizers (U. S.), control, 217. 
Fish: 

(G. B.): price fluctuations, 27; profits, 66; 

control, 141. 
(U.S.): control, 213, 217. 
Flax(G. B.): price fluctuations, 21. 
Flour: See also Grain. 

(G. B.): price fluctuations, 27; tariff, 59; 

Flour and Bread Order, 130. 
(U. S.) : United States Millers' Committee, 
22s; control of the mills, 229; Food Ad- 
ministration Milling Division, 229; prices, 
190, 229, 231, 233; voluntary agreement of 
millers, 229-230; control of wholesaling 
and retailing, 234; efforts to prevent hoard- 
ing, 234; profits, 234-235. 
Food Administration (U. S.): establishment, 
209; control of prices, 206, 209; policy, 210- 
218. 
Food: 

(G. B.): price fluctuations, 12, 14, 21, 331 
imports, 53-54; maintenance of supplies, 
58, 105; quantity available in 1909-1913, 
57-58; unequal distribution, cause of labor 
unrest, 10 1; control, 104; appointment of 
food controller, 109-1 10. 
(U. S.): price fluctuations, 1913-1918, 182, 



197-199, 201; Food Survey or Production 
Bill, 206; Lever Food Control Act, 206-209. 

Ford, W. F., 47. 

France, early legislation, 6-10. 

Freight and insurance rates (G. B.) : cause of 
high prices, 58; restrictions on ocean, 60. 

Fuel: 

(G. B.): price fluctuations, 33. 
(U.S.): price fluctuations, 262; Hitchcock 
resolution, 262; appointment of Fuel Admin- 
istrator, 265; price fixing, 265-268, 274; job- 
bers' margins, 268; retail prices, 269; efforts 
to relieve shortage, 271-275; production, 273. 

Furniture and furnishings (U. S.), 182, 201. 

Galveston, wheat prices, 224. 
Garfield, H. A., 223. 
Gasoline (U. S.), price fluctuations, 185. 
Gary, Judge, 283, 284. 
General Munitions Board (U. S.), 204. 
Girondins, 8. 

Gold (G. B.): effect of, on prices, 40; esti- 
mated amount in United Kingdom, June 30, 
1914, 40. 
Gold, world production, 40. 
Gore, Thomas P., 206, 224. 
Governmental control and price fixing: 

(G. B.): fair price lists, 105; Unreasonable 
Withholding of Food Supplies Act, 107; 
Cabinet Committee on Food Supplies, 107; 
Royal Sugar Committee, 108; Board of 
Trade, authority of, 108; appointment of 
food controller, 109-110; Articles of Com- 
merce Act, 107; food control committees, 
113. 
(U. S.): National Defense Act, 203; Lever 
Food Control Act, 206-209; fair price lists, 
216-218; reasons for, 318; results, 319-320. 
Grain: early legislation in France, 8; control 
(U. S.), 129-131; U. S. Food Administration 
Grain Corporation, 226-228. 
Gravel (U. S.), control, 205. 

Hagan, L M., 222. 

Ham (U. S.), price fluctuations, 185. 

Hanna, Hugh S., 194. 

Hides and leather (U. S.), price fluctuations, 
185, 307; control, 205, 308. 

Hitchcock resolution, 262. 

Hoarding: by consumer (G. B.), 63; provision 
against, by dealers (U. S.), 216. 

Hogs (U. S.): price fluctuations, 185; produc- 
tion, 249-250; stimulation of production, 251 ; 
control, 252. 

Hollow tiles (U. S.), control, 205. 

Homer, W. S., 284. 

Hops (G. B.), price fluctuations, 21. 

Hoover, Herbert, 210, 211, 226, 231, 241, 243, 
318. 

House of Commons Select Committee (G. B.), 
investigations, 44. 

House furnishings. See Furniture and fur- 
nishings. 

Housing. See Rents. 

Houston, David, 61, 207. 

Hurd, A., 49- 

Imports (G. B.): volume, 50-53. S8; table, 56; 
increased cost of, 54-55- 

Income taxes, 1914 and 1917 (G. B.), 71. 

Increased consumption, cause of high prices, 45. 

Indigo (G. B.), price fluctuations, 13. 

Inflation, cause of high prices, 36-44. 

Insurance and freight rates: cause of high 
prices, 58; cost of, against war risk, 62. 

Iron and steel (U. S.): wages, 196; price fluc- 
tuations, 278-279. 285; pig iron, 279; control, 
205, 279-283, 286-289; profits, 283; confer- 
ence between government and producers, 
287-288. 



INDEX 



329 



Jam (U. S.), control, 141. 

Joint stock undertakings (G. B.), earnings of, 

71- 
Journal of Royal Statistical Society, 60, 62. 

Kansas City, wheat prices, 224, 227. 

Labor: See also Wages. 

(G. B.): effect of diversion on production, 
48; shipping, 60; unemployment at out- 
break of war, 78; payments to idle work- 
men on account of cotton restrictive order, 
79; increase in number of women workers, 
80; increased demand, 81; increased wages, 
81; improved conditions, 85; cost of living, 
88, 91. 
(U. S.) : Cost of living, 200; effects of higher 
wages, 202. 
Labor unrest (G. B.): trade disputes, 92, 97; 
causes, 93-94, loi; investigations of British 
Association for Advancement of Science, 94; 
demands for higher wages, 98 ; nationalization 
of industries demanded, 98; Trades Union 
Congress, 98-99; appointment of commission 
of inquiry, 100. 
Lackawanna Steel Co., 284. 
Lamb (U. S.), price fluctuations, 190. 
Lambert, George, 55. 

Lard (U. S.): price fluctuations, 185, 190; con- 
trol, 213. 
Lauck, S. Sett, 194. 
Law, Bonar, 74, 124. 
Lawson, W. R., 82. 
Layton, W. E., 115. 
Lloyd George, David, 100. 
Lead (G. B.), price fluctuations, 21. 
Leather (U. S.): price fluctuations, 185, 308; 

control, 205, 308-309. 
Legislation : 

Early, in France, 6-9. 

(G. B.) : Unreasonable Withholding of Food 
Supplies Act, 107; regarding meat, 131; 
Price of Coal Limitation Act, 145. 
(U. S.): early, 10; National Defense Act, 
203; Lever Food Control Act, 206-209; 
Food Survey or Production Bill, 206. 
Leppington, C. H. d'E., 82. 
Lever Food Control Act (U. S.) , 206-209. 
Licensing system and control of margins (U. S.), 

212-214. 
License taxes (G. B.), cause of high prices, 62. 
Light (G. B.), 33. 

Linseed (G. B.), price fluctuations, 13. 
Lipton, Ltd. (G. B.), profits of, 76. 
Liquor (G. B.): price fluctuations, 21, 182. 
London stores' profits, 74-76, 85-86. 
Lough, E., 124. 

Lumber and building materials (U. S.) : price 
fluctuations, 182, 311; control, 205, 311-312. 

McCumber, Porter J., 224. 
McKenna, R., 36, 66, 115. 
Manila fiber (U. S.), control, 303- 
Manufactures (G. B.), imports, 53-54. 
Materials, raw (G. B.) : price fluctuations, 

12-14; imports, 53-54. 
Meat: 

(G. B.): price fluctuations, 19, 25; consump- 
tion, 46; causes of rise in price, 50; increase 
in price out of proportion to increase in 
freight rates, 61; profits, 68; control, 131- 
13s; quantity available, 159. 
(U. S.): price fluctuations, 190; production, 
249; control, 213, 254-255; Meat Division 
of Food Administration, 255; profits, 255. 
Merchants Committee of London Chamber of 

Commerce, 165. 
Mercury (U. S.): price fluctuations, 294; con- 
trol, 294. 
Metals and metal products, price fluctuations: 
Great Britain, 21; United States, 182. 



Milk: 

(G. B.) : price fluctuations, 29; consump- 
tion, 46; causes of high prices, 49; profits, 
66-67; control, 119-123. 
(U. S.): price fluctuations, 185, 190, 256; 
control, 213, 257-259; in Chicago, 256- 
257; Milk Producers' Association, 256-257. 
Minerals (G. B.), price fluctuations, 13-14, 20. 
Minneapolis: wlieat, 224; flour, 229. 
Money, gold, silver and uncovered paper, in 

circulation in 40 principal countries, 44. 
Montagne, 8. 

Munitions: profits of firms in G. B., 73; con- 
trol in United States, 203; United States Gen- 
eral Munitions Board, 204. 

National Association of Sheet and Tin Plate 

Manufacturers, 284. 
National Defense Act, 203. 
National Trades Union Congress (G. B.), 103. 
National Union of Railways Employees, 98. 
Nationalization of industries, demand for 

(G. B.),98. 
Nayle Steel Co., 284. 
New Orleans, wheat prices, 224. 
Newsprint paper (U. S.) : price fluctuations, 

315; control, 31S-317. 
New York: percentage of increase in cost of 

living, 201; wheat prices, 224. 
Nicholson, Prof. J. S., 38, 71. 
.Nickel (U. S.): price fluctuations, 294; con- 
trol, 205, 295. 
Nitrate of soda (U. S.) : production, 306; price 

fluctuations, 306; control, 306. 
Nitric acid (U. S.): price fluctuations, 305; 

control, 205, 306. 
Notes and certificates outstanding (G. B.), 38. 

Oakland, percentage of increase in cost of living, 

201. 
Oats: 

(G. B.) : Oats and Maize Products Orders, 
131; control, 154, 156; area under, 157. 

(U. S.): price fluctuations, 185; control, 213. 
Ocean freight rates (G. B.), increased, 59. 
Oleomargarine: Great Britain, 31; United 

States, 213. 
Omaha, wheat prices, 224, 227. 
Onions (G. B.), control, 141. 

Paish, Sir George, 54, 62, 84. 

Palgrave, Sir Inglis, 38. 

Palm Oil (U. S.), control, 213. 

Paper (U. S.), price fluctuations, 1913-1918, 

182. 
Pauperism (G. B.): decline of, 79; table. So. 
Peabody, F. S., 264. 
Peanut oil and peanut meal (U. S.), control, 

213. 
Peas: Great Britain, 140; United States, 213. 
Petroleum: Great Britain, 21; United States, 

185, 277. 
Philadelphia: percentage of increase in cost of 

living, 201; wheat prices, 224. 
Phillips, Marion, 102. 
Pig iron, lead and tin (U. S.) , price fluctuations , 

185. 
Pigou, A. C, Prof., 38. 
Pigs (G. B.), number, 158. 
Platinum metals (U. S.): control, 296-297. 
Population (G. B.): food requirements for, 

57; has remained stationary, 58. 
Pork (U. S.), price fluctuations, 185. 
Potatoes : 

(G. B.): price fluctuations, 31; profits, 66; 
control, 123-129, 156; area under, 157. 

(U. S.), price fluctuations, 185, 190. 
Poultry (U. S.). control, 213. 
Pretyman, E. G., 45. 61. 
Price Fixing Committee of War Industries 

Board (U. S.) , 205-206. 



330 



INDEX 



Prince of Wales Fund (G. B.), 78. 
Print Cloths (U. S.). price fluctuations, 303. 
Price Interpreting Boards (U. S.), 216-217. 
Production : 

(G. B.): high costs of, 47-48; quantity of 

home, 5S, 58; table, 56. 
(U. S.) : agreements between government 
and producers, 204; wheat, 219; sugar, 
237_, 247-248; meat, 249. 
Production of gold, world, 40. 
Profiteering: 

(G. B.): steamship lines, 60; result rather 
than cause, 65; in foodstuffs, 66-70; excess 
profits tax returns, 71; earnings of joint 
stock companies, 71; London stores pro- 
fits, 74-76; labor unrest, 97. 
(U. S.), control of, 214-215. 
Prothero, G. W., 128, 154, 164. 
Public Accounts Committee (G. B.), investiga- 
tions, 73. 
Pulse (G. B.), control, 140. 
Purchase price defined (U. S.), 214. 

Quicksilver (U. S.), control, 205. 

Rabbits, wild (G. B.), control, 141. 

Rags (U. S.), control, 303. 

Rationing in United States, objections to, 211. 

Reckless buying, cause of rise in prices, 47. 

Reed, James A., 206. 

Replogle, J. L., 287. 

Rents: Great Britain, 33; United States, 193, 

199, 201. 
Retail Prices: 

(G. B.): price fluctuations, 24; Retail 
Prices Order, 140; 

(U.S.): fluctuations, 188-193. 
Rhondda, Lord, 36, iii. 
Rice (U. S.), control, 213. 
Rosenwald, Julius, 204. 
Rout, Jacques, 8. 

Royal Society, investigations of, 55-56. 
Rubber: 

(G. B.): price fluctuations, 21. 

(U. S.): production, 309; price fluctuations, 
182, 309; control, 310-311. 
Runciman, W., 36, 45, 61, 66, 128, 156. 
Rye (U. S.), price fluctuations, 185; control, 

212-213. 

St. Louis, wheat prices, 224. 
Sand (U. S.), control, 205. 
San Francisco, percentage of increase in cost of 

living, 201. 
Scott, Frank A., 205. 
Seattle, percentage of increase in cost of living, 

201. 
Selborne, Lord, 153. 
Selling price defined (U. S.), 214. 
Shadwell, A., 65. 
Sheep (G. B.), number, 158. 
Shipping: See also Tonnage. 

(G. B.) : destruction, 49; control, 60-61; 
profits, 73-74- 

(U. S.) : control of prices of ships and mate- 
rials for navy, 203. 
Shoes: Great Britain, 34, 73; United States, 

185. 
Silver coinage (G. B.), net issues of, 39. 
Smillie, Robert, 102. 
South Wales Commissioners of Inquiry into 

Industrial Unrest (G. B.), 69. 
Soya bean oil and meal (U. S.), control, 213. 
Spelter (U. S.), price fluctuations, 185. 
Spokane, percentage of increase in cost of living, 

201. 
Stanley, Sir Albert, 149. 
Steel (U. S.): price fluctuations, 185; wages in 

plants, 196; control, 205. See also Iron and 

Steel. 
Stockyards (U. S.), control, 217. 
Stores (G. B.), profits of, 74-76. 



Strachie, Lord, 136. 

Sugar: 

(G. B.): price fluctuations, 12-15, 28-29; 
tax on, 62; appointment of Royal Sugar 
Commission, 108; control, 114- 119. 
(U. S.): production, 237, 247-248; causes of 
shortage, 237-238, 241-243; price fluctua- 
tions, 185, 190. 238-241; control, 212-213, 
216, 238-239; Sugar Distributing Commit- 
tee, 240; International Sugar Committee, 
240; American Refiners' Committee, 240; 
rationing, 243-246; Sugar Equalization 
Board, 245; consumption, 246; profits, 246; 
restrictions on sale of, 216. 

Sulphuric Acid (U. S.): production, 307; price 
fluctuations, 307; control, 205, 307. 

Supply of commodities (G. B.), 48. 

Sweets (G. B.), control, 141. 

Sykes, A., 254. 

Tables: 

(G. B.): Monthly fluctuations of index 
numbers of commodities, 15; wholesale 
prices of commodities from June, 1914. to 
December, 1917, 16; comparison of war and 
prewar annual index numbers, 17; compari- 
son of war and prewar monthly index num- 
bers, 17; showing advance in prices of com- 
modities, 18; rise shown by Board of Trade 
index numbers of wholesale prices of 47 
articles, 21; fluctuations of yearly average 
wholesale prices of commodities, 22-23; 
showing per cent of increase in certain arti- 
cles since July, 1914, 32; average percent- 
age increase in prices of clothing between 
July, 1914, and September, 1916, 34; 
world production of gold since 1906, 40; 
yearly returns of foreign trade shipping, 
si; imports and exports, 51; volume of 
trade, 53; analysis of individual groups of 
imports for 1916, 54; quantities of food 
materials imported and home produced, 
S6; comparative table of profits, 72; net 
profits of London stores, 74; unemploy- 
ment among trade unionists in 1900-1917, 
79; number of paupers in receipt of poor 
relief, 80; rise in cost of living and reduced 
purchasing power of sovereign spent on food 
in U. K., during the war, 89; schedule of 
maximum wholesale meat prices, 133; pro- 
duction of coal, 1913-1917. 144; crop acre- 
age of England and Wales, 157; average yield 
of crops per acre for England and Wales, 
158; quarterly movements of prices, 173; 
prices at end of March quarter, 1914-1918, 
174; growth of national debt, 175; acreage 
under crops, 176; number of live stock, 177; 
estimated crops, i77. 

(U. S.) : index numbers of wholesale prices, 
1913— 1918, 181-182; movement of whole- 
sale prices, 183-185; index numbers of all 
commodities, 1916-1917, 187; extent of 
price fixing in September, 1918, 188; index 
numbers, September, 1918, 188; average 
money retail prices and per cent of increase 
or decrease June 15 of each specified year 
compared with June 15, 1913, 189; relative 
retail prices of food, 1913-1918, 190; average 
and relative retail prices of coal in ton lots 
for household use, 192; relative wages in 
leading occupations, 1917, compared with 
1914-191S, 195; purchasing power of wages 
measured by retail prices of food, 197; the 
nation's food bill, 198; estimated working 
man's budget in 1911, 1914 and 1917. as 
compared with 1900, 200; wheat prices, 
231 ; iron and steel prices in dollars per gross 
ton, 285; list of commodities the price of 
which was brought under government con- 
trol, 321; official U. S. Food Bulletin, 323- 
324. 



ID 161. 



INDEX 



331 



Tacoma, percentage of increase in cost of living, 
201. 

Taxation (G. B.): cause of high prices, 62-63; 
check to consumption, 63; income and prop- 
erty taxes, 71. 

Tea (G. B.): price fluctuations, 12, 14-15, 28; 
tax on, 62; profits, 66; control, 138. 

Textiles: Great Britain, 13-14, 20-21; United 
States, 302. 

Timber (G. B.), price fluctuations, 13. See also 
Building materials. 

Tin plate (U. S.), price fluctuations, 185. 

Tobacco: Great Britain, 21; United States, 
182. 

Tonnage (G. B.) : shortage, 38; effect of short- 
age on production, 49; prices paid by Great 
Britain and neutral countries, 60. 

Torner, R. J., 69. 

Trade (G. B.), 42, 50-53. 

Trades Union Congress (G. B.), demands in be- 
half of labor, 98-99. 

Transportation, 61, 199. See also Shipping, 
Tonnage. 

Treasury notes (G. B.) : issuance, 41 ; relation 
of issue of, to rise in prices, 43. 

Unemployment (G. B.), increase, on outbreak 

of war, 78. 
United States Steel Corporation, 283-284. 

Varlet, 8. 
■ Vegetable food (G. B.), price fluctuations, 13-14. 

Wages: 

(G. B.) : increases in 39, 81-82; below in- 
crease in price of necessities, 82; cause of 
high prices, 82. 

(U. S.), fluctuations in, 194-197. 



War Industries Board (U. S.), 204-205. 

War Risk, cost of insurance against, 62. 

Weeden, W. B., 10. 

Welfare (G. B.), improvement in, 83. 

West Penn Steel Co., 284. 

Wheat: 

Early legislation, 6. 

(G. B.): tariff, 59; cause of high prices, 96; 
efforts to increase production, 151; control, 
152-156; area under, 157. 
(U. S.) : control, 212-213; production, 219; 
Allied needs, 219; prices, 185, 22s, 227; 
acreage, 222; Committee of Grain Ex- 
changes in Aid and National Defense, 224; 
U. S. Millers' Committee, 225; measures 
adopted by Food Administration, 225; 
Food Administration Grain Corporation, 
226-228; consumption, 228. 
Whiskey. See Liquor. 
Wholesale prices (U. S.), fluctuations, 1913- 

1918, 181-188. 
Women workers (G. B.), increase in number, 80. 
Wood alcohol (U. S.) : price fluctuations, 304; 

control, 304. 
Wood pulp (U. S.), price fluctuations, 1913- 

1918, 182. 
Wool (U. S.) : production, 300-301; price 

fluctuations, 185, 301; control, 205. 
Workers' Committee (G. B.) : investigations, 

95-96; national conference, 97. 
Workington Iron and Steel (G. B.), profits of, 

73- 
Workmen (G. B.): condition of, 78, 83; in- 
crease in wages below that in price of neces- 
sities, 82. 

Zinc: Great Britain, 21; United States, 205, 
295-296, 311. 









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